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Cramer: this stock is best of breed

Lawrence Lewitinn
Talking Numbers
Cramer: this stock is best of breed

Three consumer stocks come in better than expected. Is the American consumer back and what does that mean for the Home Depot?

Good news for some major retailers may be a sign that the American consumer is spending more.

Three large chain stores representing disparate types of goods are coming in with second quarter numbers better than expected. The underlying theme for all of them is consumer discretionary spending.

Selling Williamsburg hipster-inspired clothes to teens in malls continues to work well for one retailer. Last night, Urban Outfitters reported second quarter sales of $758.5 million. While that was nearly $10 million shy of estimates, it represents a jump of 12% from the previous year. Profits also were up, coming in at $75.4 million or nearly 25% more than last year.

(Read more: Urban Outfitters dressed to impress in 2Q)

Consumer electronics giant BestBuy posted higher-than-expected sales and profits. But, while the $9.3 billion in the last quarter’s revenues were $170 million more than analysts anticipated, it was still down from last year. Same-store sales fell 0.6% and overall, revenues were 0.4% less than 2012’s second quarter.

(Read more: Tight cost controls boost Best Buy quarterly profit)

Meanwhile, home improvement behemoth the Home Depot showed revenues of $22.52 billion in the most recent quarter. That’s 9% than last year’s and $730 million more than Wall Street expected. At $1.8 billion, net income was $270 million more than this time last year.

(Read more: Home Depot reaps benefits from US housing rebound)

The Home Depot’s performance has gotten the attention of CNBC’s Jim Cramer. Speaking on “Squawk on the Street”, Cramer lavished praise on the company and CEO Frank Blake, saying:

“Frank Blake, the CEO of Home Depot is executing better than I’ve ever seen… You’ll start hearing that the consumer’s spending much more money on the house because a dollar put into the house is giving a buck and a quarter... Remarkable quarter! Again, great execution!”

But can the Home Depot help you improve your portfolio?

We ask the Talking Numbers traders to tackle that question. On the fundamentals is Talking Numbers contributor Enis Taner, Global Macro Editor at RiskReversal.com. Fellow contributor Richard Ross, Global Technical Strategist at Auerbach Grayson, looks at a chart of the Home Depot.

Where is the Home Depot going next? Watch the video above to hear Taner and Ross analyze the stock and decide for yourself.


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