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Shares of Herbalife (HLF) - Get Herbalife Nutrition Ltd. Report are up more than 3% Thursday after the herbal supplements company beat earnings per share and revenue expectations.

"They reported a better-than-expected quarter," TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said on CNBC's "Mad Dash" segment.

At more than 16 times earnings though, investors could be worried about valuation, especially as its peer, GNC Holdings (GNC) - Get GNC Holdings, Inc. Class A Report , trades at just 7 times earnings, Cramer said. "So be careful, the stock may be overvalued in terms of earnings." 

But this isn't so much an earnings story as it a short-squeeze story, he said, referring to the stock's high short interest and ,most notably, Bill Ackman's sizable, well-publicized short position in Herbalife.

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"If you're short it, you see enough to be skeptical. If you're long it, you're feeling great," Cramer said of the company, adding, "If you come in and buy, you're just trying to break Ackman."

That's never been a good reason to buy the stock, he added. Instead, investors should focus on earnings or growth potential. But, inevitably, there will be some investors buying it just to push the short squeeze.

On the company's conference call, management talked about how the Federal Trade Commission's new rules will be good for the business, not bad for it, and how a potential share buyback could be in store next year, Cramer added.

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At the time of publication, Cramer's Action Alerts PLUS had no position in companies mentioned.