Cramer's 'Mad Money' Recap: Finding Opportunity in a Declining Stock
Five Below is by no means an inexpensive stock, noted Cramer, as it now trades for 50 times earnings with a 35% growth rate. But the company does have a proven concept and only 226 locations with the opportunity to expand to over 2,000.
Cramer said by comparison, Dollar General (DG) has 10,000 stores, while Dollar Tree (DLTR) has 4,300. Using the current valuations for those stocks, Five Below should be worth $4 billion to $5 billion, whereas its current market cap is less than $2 billion.
Cramer cautioned investors not to chase shares of Five Below higher, as the stock has exhibited the peculiar pattern of falling sharply when it reports earnings. He said that as with many momentum stocks, there will be plenty of opportunities to pick up shares on the cheap later on.
In the "Executive Decision" segment, Cramer spoke with Patrick Doyle, president and CEO of Domino's Pizza (DPZ), a stock that's come under fire recently as shares have seemingly stalled, up just 4% for the year.Doyle said Domino's remains an international growth story as the company is now slightly bigger outside the U.S. than it is inside the U.S. He said Domino's will be celebrating its 10,000th location in Istanbul, Turkey, later this week, making it only the eighth restaurant chain in the world to achieve that milestone. Doyle said restaurants need to have an international story in order to thrive in today's market, and Domino's has a proven that their concept works and they have a lot of room to grow. He noted that Domino's only has 100 locations in India, a country with over one billion people, and those locations continue to grow in the double digits. Other hot spots for Domino's include Turkey, where the company has 250 stores, and France, a country, Doyle noted, that "eats a lot more pizza than people think." He noted that Domino's continues to represent a good value, which helps it thrive even in weaker economies. Doyle closed by saying Domino's is always looking for ways to reward shareholders through additional dividends and stock buybacks. Cramer said while the stock may be stalled, Domino's is still a great story.
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