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NEW YORK (
) -- "Stop looking for bubbles where there aren't any bubbles," Jim Cramer told the viewers of his
TV show Thursday. He said that now's the time to tip-toe back into the markets, not run for the exits.
Cramer said it's true that the markets have been up six weeks in a row, but that doesn't mean that investors need to worry about bubbles. He said the definition of a bubble is when investors pile into the markets with reckless abandon, but in truth, the very opposite have been happening for over a decade.
The exodus began after the dot-com collapse in 2001, said Cramer, and continued after the 2008 financial collapse, the flash-crash of 2010 and again during the summer of 2011.
Cramer said he hears the calls of a bubble in tech stocks, but with bellwethers like
trading at just 10 times earnings, a fraction of what they were just a few years ago, how can that be a bubble?
He said that even
, a stock which he owns for his charitable trust,
Action Alerts PLUS, trades at just seven times earnings after backing out the company's nearly $100 billion in cash.
Some have called a bubble in retail, said Cramer, but
still trades below where it did a decade ago. THe same is true with the oil stocks, with companies like
both trading at super-low valuations.
Cramer acknowledged there is unbridled excitement about the upcoming Facebook IPO, but said there's nothing wrong for investors to get excited about an IPO. Cramer recalled how he received hate mail after endorsing the
IPO at $80 a share, only to see that company double and double and double again.
"Maybe, just maybe, stocks are coming back into favor," Cramer concluded. "Would that be so horrible?"
Two Faces of Facebook
"There are two faces to the upcoming Facebook deal," Cramer told viewers. The first, he said, is the deal itself, while the second is the company's resulting valuation.
Cramer explained that with 840 million active users of Facebook, there's no denying that retail demand for this IPO will be huge. However with so few shares available, just about all of those investors will be forced to buy in the aftermarket, he said, which will send shares markedly higher. "You won't have a chance to win unless you're in," said Cramer, referring to getting in on the initial IPO before it begins trading publicly.
But what after it begins trading? Cramer said that's the valuation side of the Facebook deal. He said if shares double on the IPO, it's likely that the valuation would be too high and investors should sell no matter what. If shares rise only slightly however, it's possible that shares of Facebook would be worth holding onto.
The valuation side of the equation remains to be seen, said Cramer. But for now what's important is getting in on the IPO, he said, as that side of the Facebook deal will be a winner no matter what the valuation ends up being.
In the "Executive Decision" segment, Cramer once again welcomed with Jack Hartung, CFO of
Chipotle Mexican Grill
, a stock that dipped 2% after it reported a two-cent-a-share earnings miss on a 23% rise in revenues. Shares of Chipotle are up 650% since Cramer first got behind the company six years ago.
Hartung commented on the fact that Chipotle restaurants are now grossing $2 million per restaurant when they were only producing $1.4 million just a few years ago. He said that only a small fraction of that increase has come from price increases, while the majority of it is from existing customers becoming more loyal to the brand and new customers becoming loyal. He said that Chipotle aims to remain affordable so that more customers can discover what they're all about.
When asked about rising food prices, beef in particular, Hartung noted that when it comes to the all-natural products that Chipotle buys, more demand is actually a good thing. He explained that as demand for all-natural products increases, so does the supply, which will ultimately lead to lower prices for everyone. "More demand is better for our business over time," Hartung said.
Turning to the company's advertising efforts, Hartung said that Chipotle will never run advertising centered around gimmicks or limited-time offers. He said that the Chipotle experience is special and their advertising is about building a bond with customers and allowing them to discover what the brand is all about.
Finally, when asked about expansion, especially with the company's Shophouse Asian Kitchen concept, Hartung said the company is excited about Shophouse but will continue to take it "one step at a time." He said the company is opening a second Shophouse location, but is still looking to refine the concept and is not quite ready to say that Shophouse will be the next Chipotle.
Cramer told viewers that the dip in Chipotle's stock price is the perfect buying opportunity and they should stick with the company.
Healthy Food Trend
In a second "Executive Decision" segment, Cramer sat down with Irvin Simon, chairman, president and CEO of
, which delivered a three-cent-a-share earnings beat on a 33% gain in revenues form last year. Shares of Hain have returned 129% since Cramer first recommended it in April 2010.
Back in 2010 Simon made the call that consumers will have to start eating healthier and now numbers are proving it. He said that while other packaged foods companies have reported sales down 7%, Hain has seen sales rise by 7%.
Simon noted that consumers are buying more natural products and fewer conventional ones. As a result, Hain now has over 2,200 products in
, he said.
Another big trend for the company has been packing. He said Hain is big on packaging and giving customers what they want, which is why sales of products in pouches has ballooned to 20% of sales. Pouches are great for infants, toddlers and adults, and Hain plans on offering more innovative packing in the future, he said.
Two other big areas for Hain included the company's tea products sold in K-cups that work with Keurig brewers and Greek yogurt. Simon said that while coffee is big in the morning, lots of people drink tea in the afternoon and the K-cup has given Hain huge exposure to the office market. In the case of Greek yogurt, the Greek Gods brand has gone for selling $12 million a year to $15 million a quarter, he said.
Cramer remained bullish on Hain.
Cramer was bullish on
( CBOU) and
Cramer was bearish on
In another "Executive Decision" segment, Cramer spoke with David Pyott, chairman, president and CEO of
, a stock that got hammered down 3% after the company reported only inline sales and earnings.
Pyott was bullish on his company's flagship product, Botox. He said the company has enjoyed success expanding the use of the drug to treat chronic migraines. He said that of the 10,000 neurologists in the U.S., some 4,600 have been trained to use the drug for migraines and 88% of all managed care has agreed to pay for the treatment for patients with 15 headache days or more a month.
Pyott was also bullish on the outlook for some of their drugs in the pipeline, including ones for overactive bladder, which taps into the global mega-trend of an aging population, as well as with Voluma, a new skin care treatment that has been doing extremely well in Europe and Canada.
When asked about today's sell-off, Pyott said the only weakness Allergan saw was in Europe, where the prices for many drugs are fixed. He said the company has a history of offering conservative guidance, but it plans on spending more than the $858 million on research and development last year.
Cramer remained bullish on Allergan and said today's price dip makes for an excellent entry point for investors.
--Written by Scott Rutt in Washington, D.C.
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At the time of publication, Cramer was long Apple.
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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