On tonight's MAD MONEY on CNBC, Jim Cramer said it is time to start nibbling into retail stocks after he's been negative for a while. He thinks the Fed will start cutting rates soon and not everyone has realized they have bottomed out. The ultimate turnaround stock in the sector will be Gap Inc. (NYSE: GPS) because of the new management team. He is very particular here to only ease into the stock. He also likes Kohl's Corp. (NYSE: KSS) because it is down 20% and has a major growth vehicle. American Eagle Outfitters (NYSE: AEO) is one that has insiders buying stock.

These 3 picks are interesting picks, although Gap seems to be mauled every month in crummy stores and won't be able to fix itself fast. maybe that huge stock buyback can help it. This one may only have the "less bad is good" future, because its shoppers have abandoned it. It's too hard to love the Gap and in a private equity absent market the hopes for a buyout seem a bit childish. Kohl's and American Eagle are both in a spot that could generate serious returns if these go back to their prior highs. American Eagle at $25.00+ would generate close to a 40% gain if it goes back to a year high of $34.80, and Kohl's at $57.00+ would also show close to a 40% gain for it to hit $79.55.

It is far too easy to call for the death of the consumer because you'd have to say "But, this time the consumer really will be dead." Rumors of the death of the consumer seem to ALWAYS be exaggerated time after time. The safest bet here for the whole retail sector is perhaps the Merrill Lynch Retail HOLDRs, although you should realize that the big box retail plays dominate this and smaller clothing retail plays are not represented well at all in this one. The other targeted ETF for the group is PowerShares Dynamic Retail. That one does have this specific clothing retail mixed into more of a broad pool. It is just less liquid.

Jon Ogg can be reached at jonogg@247wallst.com; he produces the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.