Shares of Chipotle Mexican Grill (CMG) - Get Chipotle Mexican Grill, Inc. Report are up over 5% Monday after dropping 12% Friday on news of another E. coli breakout. The stock received a number of downgrades.
TheStreet's Jim Cramer isn't surprised. The co-manager of the Action Alerts PLUS portfolio said on CNBC's "Mad Dash" segment investors are jumping in now to buy, buy, buy thanks to the recent drop in stock price. Chipotle stock trades around $564.
Cramer is confident Chipotle management will work through the current E. coli problems but it's still unclear how long this issue will persist, which creates risk for investors.
"There's clearly a problem," Cramer said. Investors are trying to factor in the impact and decide if the latest selloff correctly prices in enough of the slowdown.
While the news is bad right now, Cramer asserted that Chipotle has a very responsible management team, and the company has built up a lot of "good will" with its customer base. So when this issue is done, Chipotle should be able to recover fairly quickly.
Cramer said Chipotle should address the situation and let the public know if it has a handle on the problem or not.
At the time of publication, Cramer's Action Alerts PLUS had no position in companies mentioned.