Mad Money

Cramer: 'Think twice before you sell' shares of companies competing with Amazon

Key Points
  • Competition from Amazon doesn't always mean total annihilation, CNBC's Jim Cramer says.
  • The "Mad Money" host revisits some "Amazon survivors" to make his case.
  • Cramer's point? "Think twice before you sell" shares of companies targeted by the e-commerce giant.
'Think twice before you sell' companies competing with Amazon: Cramer

Competing with Amazon isn't always the kiss of death for a company. In fact, Amazon-induced stock declines can often be chances for investors to turn a profit, CNBC's said Monday.

"In practice, Amazon's often a lot less terrifying than it seems," the "Mad Money" host said. "Amazon-induced sell-offs often turn out to be terrific buying opportunities because the reality simply isn't as bad as people expect it to be."

The supermarket stocks were among Cramer's favorite "Amazon survivors." While shares of Costco and Sprouts Farmer's Market took a hit when Amazon bought Whole Foods, they've managed to rally handsomely since the deal.

In the roughly 15 months since Whole Foods became part of the e-commerce giant, Costco's and Sprouts' shares have climbed about 56 percent, respectively, suggesting that Amazon hadn't crimped the industry's profits as dramatically as investors thought.

"My view? I like Costco because it's got something the others don't have: a membership model where ... you pay them for fantastic deals," Cramer said. "The rest of the supermarkets? They've run up too dramatically and there's nothing wrong with ringing the register."

In late 2016, the auto parts retailers also ostensibly became Amazon targets after Jeffries analysts warned that the e-tailer could disrupt the space.

But the initial double-digit declines in shares of Advance Auto Parts and O'Reilly Automotive overestimated the power of the Death Star, Cramer's friendly moniker for Amazon taken from the Star Wars franchise.

The "Mad Money" host recommended the group last December, and, year to date, Advance Auto's stock has gained 70 percent and O'Reilly's has rallied 43 percent.

"I think this group has a whole lot going for it," Cramer said. "Amazon clearly hasn't wrecked their business model. I think Advance Auto and O'Reilly are both good, cheap growth stocks, but AutoZone impresses me as an absurdly cheap value play, and we know they're fighting back against online competition with their own next-day home delivery service."

Finally, there's Etsy, an online marketplace for handcrafted goods that competes with Amazon Handmade. Etsy's pull with customers and creators has allowed the company to distinguish itself from Amazon despite Amazon's continued efforts to take on handmade goods retail.

So far, it's paid off for Etsy's shareholders. The share price has more than quadrupled since Cramer started recommending Etsy in May 2016, and the stock shows no signs of slowing its rise, he said.

"The bottom line? I adore Amazon — there's not even an issue, OK? — but that doesn't mean every industry they try to disrupt is just going to fold like a house of cards," the "Mad Money" host said. "So the next time you hear about them entering a new market and you see a group of stocks get eviscerated, think twice before you sell — history says it might turn out to be a terrific buying opportunity."

WATCH: Cramer tracks "survivors" of the Amazon Death Star

Cramer: 'Think twice before you sell' shares of companies competing with Amazon

Disclosure: Cramer's charitable trust owns shares of Amazon.

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