- CNBC's Jim Cramer highlighted five consumer plays that investors should be watching now: Walmart, Amazon, Target, Costco, and Home Depot.
- Each stock within the group is outperforming the S&P 500 this year and is trading near an all-time high.
- Short Hills Capital Partners' Steve Weiss bought shares of Amazon and Target on Thursday in order to play the strong consumer.
A new basket of large-cap stocks is poised to take the spotlight from the widely-followed and high-flying "FANG" group — at least according to CNBC's Jim Cramer.
But now he says investors should focus on a basket of five consumer plays, or the "WATCH" stocks — Walmart, Amazon, Target, Costco and Home Depot. This isn't exactly an under-the-radar trade since all five stocks have outperformed the broader market this year, but Cramer believes there's still plenty of upside ahead due to pricing power and superior supply chain management.
Like Cramer, Short Hills Capital Partner's Steve Weiss believes the consumer is strong and is therefore buying shares of Amazon and Target.
"I wanted to be more exposed to the consumer. I didn't have much retail exposure," he said Thursday on CNBC's "Halftime Report."
The discretionary sector, which contains Amazon and Target, soared to a new all-time high during Friday's trading session, along with technology, staples, and utilities.
Investitute's Pete Najarian has owned Target for years, and still likes the name because it's "very inexpensive" and continues to exhibit strong growth. In May the Minneapolis-based retailer reported first quarter earnings per share growth of 15% and currently trades at 14 times next year's earnings.
But when it comes to the other stocks in the "WATCH" basket, Najarian cites concern over elevated valuations.
"From a valuation perspective, I get a little bit more nervous about the Walmarts, the Amazons of the world… I look at Costco, I feel like it's a little bit inflated in terms of its P/E right now," he said.
All three retailers set a new record high on Friday and trade at a forward earnings multiple above the S&P 500.
Elsewhere within the "WATCH" group, "Halftime Report" trader Jon Najarian is focusing on Home Depot. Despite the stock's 26% rally this year, Najarian believes the home-improvement retailer is still set up for a large gain.
Najarian sees Home Depot shares "15% higher very quickly" if any material progress is made toward a deal in the U.S.-China trade war.
Disclosure: Pete Najarian owns shares of Target and Target calls. Jon Najarian owns Target calls. Steve Weiss owns shares of Amazon and Target. Joe Terranova owns shares of Walmart and Target.