Jim Cramer’s 23 Stocks: Arm, QXO, and the Market’s Biggest Threat

13. Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI)

Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) was among the stocks Jim Cramer covered on Mad Money as he discussed the wave of IPOs being the market’s possible biggest threat. Cramer was bullish on the stock during the episode, as he explained:

What happened to the stock of Ollie’s Bargain Outlet Holdings? This is one of the big off-price chains, so you’d think it would be thriving when the consumer’s feeling the pinch from sky-high gasoline prices. But ever since peaking last August, the stock has been, well, a real dog… Wall Street’s expectations got too high, and Ollie’s execution couldn’t keep up. They never totally dropped the ball, but there were too many missteps given that the stock was trading at a premium to the other off-price chains, which were much more consistent…

In the end, Ollie’s is not TJX, and it may not deserve a TJX multiple, but it also shouldn’t trade like a broken retailer. This is good business that got priced too richly, then got punished as investors moved toward bigger, cleaner value names. Now, with the stock back in the low $90s and trading around a much more reasonable price-to-earnings multiple, I think the risk-reward is a lot more enticing. So I’d say that Ollie’s now belongs on the shopping list. The stock seems more fairly priced and cheap right now, even with this multiple contraction. But if the entire market continues to do well, companies outside the data center with low multiples should eventually start to enjoy the fun.

Small, small, start small, buy gradually in weakness, and watch three things: same store sales, new store productivity, and the gross margin. If Ollie’s can keep delivering positive comps while opening stores without ruining returns and holding that gross margin, I think this stock can work again. Bold claim because it’s been really bad. Here’s the bottom line: When you look at Ollie’s, the business isn’t perfect, and the stock’s been frustrating, stock’s been bad, it’s still not the best bargain at current levels, but it’s certainly cheaper than it’s been in ages. In an economy where everyone wants a bargain, Ollie’s still has a simple premise that resonates: good stuff cheap and at the right price, which may be right here, that may apply to the stock, too.

Ollie’s Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) sells discounted closeout and excess inventory across home goods, food, toys, electronics, and more.