Cramer looks 'outside the mall' for these 2 retail leaders

Retail is a bad business to be in with the rise of e-commerce giant Amazon, but Jim Cramer still has faith in some household names that could end up winners of the brick-and-mortar game.

Despite last week's retail bounce, mall-based retailers have been struggling the most. Macy's and JC Penney each have plans to shutter over 100 stores and gave weak 2017 guidance. Nordstrom's revenues missed expectations. Same-store sales are declining across the board.

"If you want to find any real retail winners, you need to look outside the box and outside the mall," the "Mad Money" host said.

First, Cramer turned to Kohl's, a discount retailer with more locations in strip malls and outlet centers than traditional malls.

Watch the full segment here:

While its same-store sales have slumped and 2017 guidance is subpar, like the rest of the category, Cramer said the department store chain has a geographic advantage.

"The fact that Kohl's isn't dependent on the mall — instead, the stores are generally located in the kind of retail hubs that can still generate traffic — that's a giant positive," he said.

Cramer added that the company started a $2 billion share-buyback program last November, a major plus considering its $6.9 billion market cap and over 172 million outstanding shares.

Kohl's has also been keeping its inventories lean, and is beginning to see its multi-billion-dollar digital technology investments pay off. Cramer lauded its move to start selling Under Armour products, saying that adding more popular brands to the racks could boost business further.

"It wouldn't shock me if Kohl's can actually turn itself around, and in the meantime the company's paying you a handsome 5.5% yield to wait," Cramer said.

Or take Wal-Mart, a massive multinational retailer and one of the only names in the space delivering true same-store sales growth, at least according to its February earnings report.

Not only is Wal-Mart chasing the e-commerce trend via its recent acquisition of Jet.com, but Cramer believes that the company has "the best balance sheet in the space" and is one of the best-positioned retailers to handle a possible border adjustment tax.

"Even though I don't think the border tax idea that Congress keeps pushing is a serious possibility, in the unlikely event that I'm wrong and it does happen, Wal-Mart's maybe one of the few, if not the only, retailer that could handle it — the company claims that it only imports about a third of its goods, as opposed to 97 percent of all apparel and 90 percent of all electronics," the "Mad Money" host said.

And Cramer has faith that Wal-Mart's stock is still far from its peak.

"I could actually see Wal-Mart inching toward its old high of $90, up from $73 here, because of better management and superior pricing," Cramer said. "Now, it would be a lengthy, multi-year journey, but I have to tell you, with Wal-Mart, you've had a bit of a sell-off. I think you've got to do some buying."

So while all of retail rebounded on Thursday, Cramer urges caution.

"I don't want to fool ourselves here," he said. "It's just too hard to offset the Amazon effect there, which is why I'd prefer to go with non-mall based plays like Wal-Mart, Kohl's, the outstanding Burlington Stores, or TJX, all of which could be winners for the patient among you."

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