Cramer Quick Take: Wealth Effect Benefits Retailers
NEW YORK (TheStreet) -- What's really driving the strong earnings momentum at Target(TGT) ? Jim Cramer told Lindsey Bell at TheStreet.com Wednesday that it's a lot more than just better employment numbers.
Cramer said that Target is benefitting first by having the right merchandise that the consumer wants to buy, but on a more macro level, consumers are also experiencing the wealth effect. He said that most people are no longer living in fear of being laid off, while at the same time they're seeing the value of their homes increase and maybe even seeing gains in their 401(k)'s.
When people feel wealthier, they spend more, Cramer concluded, which makes the gains at Target and others like Home Depot(HD) not a zero sum game that's only about taking share from competitors. Trading at 12.5 times earnings, Cramer said shares of Target can go much higher.
Watch the full Cramer interview here.
--Written by Scott Rutt in Washington, D.C.
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