Cramer: Dollar General, Five Below Are Buys

Tickers in this article: DG DLTR FDO FIVE
NEW YORK ( TheStreet -- Debra Borchardt: Dollar General reported their earnings this morning and some have seen a cloud in these earnings, not the silver lining. I'm here with Jim Cramer. So Jim, I've got to say, listen, these earnings up 9.2%, revenue up. They beat the estimate. Sales growth 10 to 12% . . . I did not see a lot of bad in here.

Jim Cramer: There wasn't.

Debra Borchardt: And I was surprised that some people were pointing to it, "Oh, but it missed and it wasn't that great."


Jim Cramer: Well I harp back . . . this is a painful name for me. There've been a couple painful names of late with Action Alerts PLUS, got Dollar General where I told Stephanie, "Look. I'm very concerned that maybe this is the beginning of a tailspin," last quarter.

Debra Borchardt: A lot of people felt that way.

Jim Cramer: And they pulled out of that tailspin with shining colors. What I felt was most interesting was that it was done intra-quarter. We had been very worried about gross margin compression just four months ago. The gross margin compression did not appear. We were worried about price wars. The price wars did not appear. So now you've got the stock actually back to where it was before the chatter that things had gotten bad in the dollar industry. I think that people should look at Five Below , which supports later this week because it's a good sign for them.

I don't want to circle back to Family Dollar because I think Family Dollar's the weakest operator of the group. Dollar Tree . . . maybe. That got really hammered. This sector of the market was supposed to be finished as things got better and people shopped at Target and Costco .

Debra Borchardt: Yeah. But then we had our payroll tax holiday removed and all of a sudden, the paychecks were a lot lighter again.

Jim Cramer: Right.


Debra Borchardt: And I think that combined with higher gas prices . . .

Jim Cramer: Right.

Debra Borchardt: Dollar General . . . ten thousand stores...they're going to be close by so it's a quick shopping trip and cheaper to drive to.