This is the retail holder ETF for comparrison of ETF perfromance vs Cramer picks performance. See performance tracker at right.

8/27/07 Cramer has changed his mind about Gap (GPS) , a stock that was "so loathed, so hated, so incompetent," he said. He likes that the stock has an improved balance sheet and a new CEO. The company carries $2.7 billion in cash and investments and only $514 million in debt. Gap reported revenue of $151.9 billion in fiscal year 2006. On the inside, Gap announced a $1.5 billion stock buyback. In addition, Cramer likes new CEO Glenn Murphy and what the company is doing to improve the Banana Republic brand. Cramer called the company undervalued and a "great turnaround story in a sector that is turning." While Gap is a "best-of-breed retailer," Cramer said that buying it this week will lose you money because you will be early.

8/27/07 Reminding viewers that a number of retail stocks have been "justifiably hated," Cramer said there are some that he could get behind, especially if the Fed cuts rates. Kohl's (KSS) is a retailer that Cramer said has strangely been "dropped like a rock." The stock is down 28% since an April 20 high, and sales have remained consistent. The retailer, which earned $269.2 million in its second quarter, trades at 13 times forward earnings and has a growth rate of 18%. Kohl's has a number of catalysts on its side to help things turn around, such as a new line from high-end designer Vera Wang. In addition to liking their management, Cramer said that the new exclusive brands also bring better margins. If investors believe that the Fed will ease, then Kohl's is your best risk-reward, and it "deserves to be bought." Besides, no one's focusing on it now, he said.

8/27/07 Cramer does like American Eagle Outfitters (AEO) . When looking at retail stocks, Cramer keeps an eye out for insider buying and low evaluations. Cramer found both of those in American Eagle, which he said is "worth buying." The company's total sales were up 17% to $703.2 million in the second quarter year over year, and it trades at 12 times next year's estimated earnings. Cramer said that American Eagle is undervalued but not yet at its low point. Investors should wait until next week at the earliest to decide about buying in. The price Cramer has in mind is somewhere between $22 and $25.

For reference.