RealMoney Radio: Indigestible Whole Foods
Popular stocks tend to lose their steam, particularly when they get to twice their growth rates when compared with their multiples, Jim Cramer said on his "RealMoney" radio show Thursday.
Therefore, people need to sell Whole Foods (WFMI), he said.
Cramer has always advised people not to sell into the panic, but because of the bounce in Whole Foods right now, he suggested ringing the register.
It is a momentum stock, and "we should hate it," as it is down 11 straight points, he said. When a company's growth slows, market players should want to leave the stock -- unless it gets cheap, which Whole Foods is not getting, Cramer said.The stock "is more dangerous down here than it was when it was higher, because there's no justification for it to go higher," he said. "Whole Foods is now a broken stock, and people should take advantage of the bounce and sell it." Every week readers of TheStreet.com vote on the stock they most want Cramer to talk about. This week's "Cramer on Demand" stock was SAIC (SAI). SAIC is like the next MasterCard (MA) or NYSE (NYX) because it's a stock that was priced too cheap, Cramer said. "It is a Donald Rumsfeld stock," he said referring to the former U.S. Secretary of Defense. "People believe it will only do well "when the defense department has a blank check." But market players should not worry about this stock, Cramer said. They should feel very confident that SAIC is the defense stock that should work. People need to get into domestic security, and SAIC is the stock that should do well in that cohort, he said. While Cramer's previous domestic security pick was Essex (KEYW), he said he's replacing it with SAIC. Regarding health care stocks, Cramer said that if the fundamentals of the company are good, then market players should pull the trigger on these stocks -- but not all at once. As it is difficult to call a bottom in these stocks right now, he suggested that people buy incrementally. To see the most recent edition of The RealMoney Radio Recap in its entirety, please click here. This recap is published every day around 3 p.m. ET.
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