Cramer Thinks That Costco (COST) Is A Better Buy Than BJ's Wholesale Club (BJ)

On CNBC's Mad Money, Jim Cramer compared the recent performance of Costco COST to the performance of BJ's Wholesale Club BJ. Last year, he made the same comparison and he concluded that, back then, BJ's was the better stock to own. Before you start an analysis of a particular stock, you should first study its sector, thinks Cramer. He continued by saying that it looks like 2010 will be a good year for discount retailers. Economy is still struggling, and stores that have cheap prices will gain more market share. Their membership based business model is stable, and customers are loyal even when the economy is improving. Cramer believes that Costco (COST) is a better investment at this point in time. Costco's (COST) sales per square foot are almost two times bigger than BJ's, and Costco takes more emphasis on private label. Costco is also better than BJ's in same store sales, said Cramer. COST had a 10% increase in the last quarter, while BJ's had an increase of 8%. Costco has a more consistent increase in traffic and a bigger increase in membership revenues than BJ's. BJ's has more stores than Costco, but Costco has a huge potential for international growth. Valuation shows that Costco trades at a higher P/E multiple than BJ's, but it also has a higher growth rate.