CNBC's Jim Cramer on Monday pointed out four major retailer stocks worth buying on a pullback after their respective earnings reports this week.
Walmart, Home Depot, Lowe's and Target all are scheduled to report their latest quarterly results over the next two days, and each of these companies has taken considerable market share in their sectors, he said.
"If any of these big-box outfits disappoint when they report this week, remember this could be the last quarter where they actually face significant independent competition, funded by PPP," the "Mad Money" host said. "After that, the small guys are mostly done, thanks to a pandemic nobody saw coming and a political class that just can't get the job done.
"Luckily for your portfolio, though, mom and pop outfits aren't publicly traded, which is how the market can keep roaring despite the small business devastation."
The comments come after a mixed day of trading on Wall Street. The Dow Jones Industrial Average slipped roughly 86 points, or 0.31%, to 27,844.91. The S&P 500, which failed again to set a record during the session, climbed 0.3% to 3,381.99 and the Nasdaq Composite advanced 1% to 11,129.73.
Walmart and Home Depot are set to report quarterly earnings Tuesday morning, followed by Wednesday reports from Target and Lowe's.
Shares of Target and Walmart are up about 8% and 14%, respectively, year to date. Home Depot and Lowe's shares have risen more than 31%. Each stock rose Monday, with Home Depot making the biggest gain of the group at 2.7% during the session.
"We're about to get a set of unbelievably positive numbers from big retailers and restaurant chains, which is fabulous if you own those stocks, but frankly it is horrifying if you think about why they are thriving," Cramer said.
These big-box chains have the scale to weather the pressure placed on the economy by both the coronavirus pandemic and economic lockdowns intended to stop the spread of Covid-19, the deadly disease caused by the virus. The lockdown has devastated a range of industries, particularly retail, restaurants and entertainment that require on-premise service.
The small business community, which received some assistance via the federal payroll loan program, has been hurt by the social distancing and stay-home mandates as consumers rely even more on online shopping for goods, redirecting their spending to companies such as Amazon that can facilitate online purchases and quick deliveries.
Sporting goods, hardware, lumber yards and a vast number of other stores were rendered obsolete after being considered nonessential, Cramer said. In New York City, for an example, one-third of restaurants are forecast to be closed for good due to the pandemic.
"I love when these big household names go higher, but I hate one of the reasons they're going higher," Cramer said. "Their small business competitors are being wiped out. A lot of these smaller outfits had been able to hold their own before Covid, but now the big guys have crafted phenomenal same-day delivery services that only Amazon can beat."
Walmart last week announced a deal with Instacart on a same-day delivery program, the latest in a running list of grocery chains to do so. Target also partners with the logistics provider, in addition to its operations with Shipt, the membership-based delivery platform it acquired for hundreds of millions of dollars in 2017.
Disclosure: Cramer's charitable trust owns shares of Amazon.