Buy Dollar General for stability and Dollar Tree for high risk, high reward, says Jim Cramer.

CNBC’s Jim Cramer said Thursday that investors who value permanence should buy Dollar General and risk takers should buy Dollar Tree.

“If you’re looking for a stable operator that doesn’t have to do anything too crazy to beat valuations, Dollar General is the one. Even though they are lowering prices, I think it’s a good long-term strategy to attract customers,” said the Mad Money host.

A dollar tree is a higher-reward, riskier game where stocks can have much more upside potential if they can handle the execution. But if they screw up, you can kiss your profits goodbye,” he added.

Cramer said the two companies’ opposing pricing strategies helped Dollar General come out on top. Late last year, Dollar Tree announced that it was raising the prices of most of its products to $1.25 to offset costs caused by the pandemic.

In contrast, Dollar General said in a March 17 call with analysts that the retailer is “bending” on its $1 products, including through plans to increase in-store display of items at that price.

“While Dollar General is positioning this as a move to help its clients who often struggle to make ends meet, especially if they have a fixed income, it has the added benefit of poaching disgruntled Dollar Tree clients who aren’t love to pay. an additional quarter,” Cramer said.

Shares of Dollar General fell 2.13% on Thursday to $222.63. Earlier this month, the company reported quarterly earnings in line with forecasts, as well as lost revenue. Dollar General also forecasts higher-than-expected sales for the year and raises its dividend by 31%.

Cramer recently called Dollar General a buyable dividend stock.

Shares of Dollar Tree fell 0.11% to $160.15 on Thursday, hitting a new 52-week high of $162.13 earlier in the day. The company fell short of Wall Street’s earnings expectations in its latest quarterly report.

The host said that Dollar Tree stock has generally risen in recent months, citing changes to the company’s executive board as the reason. Earlier this month, the retailer named Richard Dreiling, a former chief executive of Dollar General, as executive chairman of Dollar Tree in response to an active investor campaign.

Piper Sandler and Loop Capital Market improved their position in Dollar Tree after the move. “Activist pressure can work wonders, especially if it’s a smart activist,” Kramer said.

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