Cramer's Top Trade on Retail Strength

Cramer on Tuesday said the best way to play the strength in retail, where sales rose 0.8 percent in November, is through what he calls junior growth stocks. These companies have smaller market capitalizations, but lots of room to expand.

Examples of junior growth stocks include names like Deckers , Lululemon , Under Armour , and Columbia Sportswear . All four of these names have market caps of between $2 billion to $5 billion. Each company also has potential for outsized growth and outsized returns as well, because the size of the its market opportunity is far larger than its market cap would suggest.

What are these companies about?

Deckers is primarily a wholesaler, which is known for its UGG brand boots. Shares of Deckers are up 330 percent since Cramer first recommended it on Nov. 30, 2006. It's up 41 percent since early November when Cramer included it in this group of high-growth stocks known as F.A.D.S. C.A.N.

With 134 locations in the U.S., Lululemon sells yoga clothing and supplies. Its stock is up 57 since Cramer recommended it at $43 and change on Sept. 27.

Under Armour is another athletic apparel wholesaler, but also has a substantial direct-to-consumer business that handles most of its transactions online.

Columbia Sportswear, maker of jackets and outerwear, is aggressively trying to expand its retail presence in the U.S. Cramer recommended this stock on Oct. 26 at $51.61. It's since posted an 18-percent gain.

Overall, Cramer said Deckers is the best junior growth play. The stock is up 136 percent year-to-date, which beats out the rest. It's also the cheapest, selling for 19.1 times next year's earnings, much lower than its 29-percent growth rate. In its most recent quarter, it delivered a 23.9-percent operating margin, up 70 basis points.

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