Retail stocks are looking more attractive after a more subdued inflation data for February.
Last week, the Bureau of Labour Statistics reported the consumer price index at 0.2% for the month and 2.8% for the year.
Economists, in comparison, were at 0.3% and 2.9%, respectively.
Easing inflation tends to be a positive for retail stocks as it boosts consumer spending.
Plus, lower CPI paves the way for rate cuts that further increase the consumers’ disposable income.
That said, there are two retail stocks that famed investor Jim Cramer particularly recommends owning at current levels: Gap and Ralph Lauren.
Why is Cramer bullish on Gap stock?
Jim Cramer sees Gap shares as worth buying “as long as you don’t think the entire economy is about to fall off a cliff.”
He has immense confidence in the leadership of Gap’s new chief executive Richard Dickson, under whom, all four of the company’s brands gained market share in the latest reported quarter.
Additionally, the worldwide clothing and accessories retailer is attractive also because it’s strongly positioned to navigate the Trump tariffs.
Gap sources less than 1.0% of its products from Canada and Mexico and about 10% from China, which suggests it will succeed in keeping resilient amidst the new tariff environment.
While the near-term may remain a bit choppy for Gap stock, the Mad Money host is convinced that loading up on it at current levels will set up investors well for the longer term.
Finally, Cramer is bullish on GAP also because it pays a rather lucrative dividend yield of 3.28% at the time of writing.
Why is Cramer bullish on Ralph Lauren stock?
Shares of Ralph Lauren have fallen more than 20% since mid-February, which Jim Cramer called a buying opportunity for long-term investors on Mad Money last week.
The famed investor is not entirely convinced that the US economy is headed for a severe recession – and against that backdrop, Ralph Lauren stock looks “darned cheap at current levels,” he added.
He acknowledged that Trump’s tariffs could impact Ralph Lauren and that some economic slowdown remains a possibility.
However, he noted that the company primarily serves high-income households, which tend to remain resilient during downturns.
Jim Cramer sees RL shares as better positioned than its peers for a comeback as the brand has succeeded in maintaining cultural relevance.
Much like GAP, Ralph Lauren is also a dividend stock that currently yields 1.50%, which makes it all the more exciting to own for those in search of an additional source of passive income.
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