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After nearly a 200% gain, it is time to say good bye to
Chipotle Mexican Grill
, Jim Cramer told viewers of his "Mad Money" show Thursday.
Although he still believes the company is "fantastic," Cramer said he cannot like the stock at this price. "Sometimes companies and their stock deserve to diverge, and right now, Chipotle is one of them," he said.
"We don't want to be greedy" and those who continue to stay in Chipotle are being piggish, Cramer said.
It's a great company, but it has become too expensive, Cramer continued. It is now selling at twice its growth rate, "the limit for growth stocks," he said. Growth stocks "rarely, if ever go higher," Cramer said. "When a stock gets to this level, you just have to sell because the risk-reward becomes awful."
Even if Chipotle goes higher, it won't be by much, and if it makes even the slightest mistake, it will get its head chopped off, he said.
Compared with Chipotle, Cramer said he considers $622-a-share
"a lot cheaper." Many people may say that Google is too expensive, but it's trading at only a little over one times its growth rate, he said.
Plugging Chipotle's valuation into Google, the search giant would be trading at about $1,200 a share, at which point Cramer said he would consider Google too expensive.
Street Not Sweet on Pepsi
It seemed the sun came out shining this morning when
announced an upside surprise, but rather than going higher, the stock lost 2 points, Cramer said.
That is because not all upside surprises are what they appear to be, he explained. Pepsi's domestic soda, Frito-Lay, and Gatorade numbers were all discouraging.
Despite these setbacks, the company managed to beat estimates because of its "excellent management," new products with good gross margins, and overseas growth.
Still, the Street judged Pepsi "harshly" today and is saying the stock does not deserve the multiple it has, and that it "may be more hostage to the U.S. economy than we thought," Cramer said.
Pepsi has had a good record with "Mad Money" and is up significantly since Cramer said he first recommended it in 2005. Cramer wondered if it shouldn't get credit for beating estimates despite horrible raw cost increases. To answer that question, he welcomed Pepsi CEO Indra Nooyi to the show.
"I have no idea why the stock behaved the way it did," Nooyi said. "I think our numbers knocked the socks off anything." Pepsi, she said, with its 4% volume growth, 11% revenue growth and 10% operating profit growth, had "fantastic numbers" any way people look at it.
The reality is commodity costs are going up, but Pepsi has the experience to deal with those increases, Nooyi said. Pepsi has plans to cover next year's inflation and is recommitting to at least 10% earnings per share growth, she said.
Further, the 2% volume growth it announced for Frito-Lay is exactly what Pepsi planned, Nooyi stressed.
However, sometimes what a company plans is not good enough for investors, said Cramer, also saying that he was impressed with the company's international strength.
"The international is headed for tremendous growth," Nooyi agreed. Also, Pepsi has gained share in the North American soda business "pretty nicely," she added.
"Pepsi is a portfolio," the chief executive explained. "It is like a mutual fund. Taken together it works."
Cramer stressed the need for market players to be price-sensitive about packaged-goods companies right now. "I want to wait for it to be below $70 before I would pull the trigger," he said. Pepsi closed at $71.77.
Banco Santander Bueno
With the euro gaining strength,
, Spain's largest bank, "is exactly the kind of Spanish stock you should consider buying," Cramer told viewers.
Currently, Banco Santander has operations in Spain, Portugal, Germany, Italy, the United Kingdom, Argentina and Brazil, to name a few, and Cramer believes it's going to go on an acquisition binge. "It's a Spanish armada that offers checking accounts," he said.
The stock was recently trading at $17, and it's moved up quickly. But further takeovers should push the stock even higher, Cramer said. Beyond growth, new acquisitions would diversify Banco Santander's deposit base. Cramer told viewers he's been looking for new ways to play "the great growth market in Latin America," and he believes Banco Santander is the way to do it.
Banco Santander is "a relatively safe bet," he added, because of its ever-rising dividend. Also, because it's primarily a retail bank, it's less exposed to credit problems, as it doesn't make its money off of the lending business, Cramer explained.
PetSmart Waits for Snow
CEO Philip Francis joined Cramer to explain why his company cut guidance last Wednesday.
"Why is weather an issue with a pet chain?" Cramer asked.
PetSmart doesn't sell dog beds, dog houses or heated bowls until it's cold, Francis explained. Also, in terms of pet food, dogs and cats are similar to humans in that they don't eat as much during the warmer months. As the weather gets colder across different parts of the country, PetSmart notices, he said. "We can tell you when cold weather hits and this years it's been very late."
At the same time, the retailer has not made any markdowns on its merchandise, Francis said. "Winter will happen, but it's delayed this year."
Cramer said he's sticking with his recommendation, as he too believes it's only a matter of time before winter comes.
Cramer was bullish on
Cramer was bearish on
North American Palladium
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At the time of publication, Cramer was long Caterpillar and Goldman Sachs.
Jim Cramer, host of the CNBC television program "Mad Money," is a Markets Commentator for TheStreet.com, Inc., and CNBC, and a director and co-founder of TheStreet.com. All opinions expressed by Mr. Cramer on "Mad Money" are his own and do not reflect the opinions of TheStreet.com or its affiliates, or CNBC, NBC UNIVERSAL or their parent company or affiliates. Mr. Cramer's opinions are based upon information he considers to be reliable, but neither TheStreet.com, nor CNBC, nor either of their affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Cramer's statements are based on his opinions at the time statements are made, and are subject to change without notice. No part of Mr. Cramer's compensation from CNBC or TheStreet.com is related to the specific opinions expressed by him on "Mad Money."
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