Game Plan: Retail's Real Winner This Season

Retailers might call Black Friday sales a success, but most stores practically had to give merchandise away to attract shoppers. So while overall revenues might have been up, most likely the profits earned were less than usual. But not all companies involved with this sector lost out. Suppliers, Cramer said, made their money regardless.

That’s why he recommended VF Corp. during Friday’s Mad Money (that and he wants the rich to start spending money at the mall as a way to keep this economy moving). VFC sells its merch to stores like Macy’s and J.C. Penney and pockets the sale. Any discounts that happen later on are a part of the stores’ balance sheet, not VFC’s. So owning this stock may be the best and only way to play retail right now.

VFC is behind brands like North Face, Wrangler, Nautica, Vans, JanSport, Lee and others. The company’s sitting on $600 of free cash flow, so that portfolio could grow even more in the near future. And VFC has a history of doing well with its purchases. North Face, arguably a very popular brand now, was earning only $250 million in sales the year VFC picked it up. Today, the outdoor apparel name does $1 billion.

Cramer’s bullish on VFC – his charitable trust owns it. The company’s using tried and true products from Lee and Wrangler to fund growth in North Face and Vans. There’s enough overseas exposure here to offset any potential problems from customer stores going out of business. And while management lowered earnings growth projections for 2008, they kept their long-term outlook at 10% to 11%.

VFC’s trading at just eight times earnings. It’s cheap, hovering at the low end of its historical average. And the company pays a 4.3% dividend yield. Cramer thinks this one’s a buy. Just be sure to build a position through small increments, picking up more as the share price comes down.

Questions for Cramer?

Questions, comments, suggestions for the Mad Money website?