After nearly a 200% gain, it is time to say good bye to Chipotle Mexican Grill ( CMG), 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 Google ( GOOG) "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 PepsiIt seemed the sun came out shining this morning when PepsiCo ( PEP) 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.
Banco Santander BuenoWith the euro gaining strength, Banco Santander ( STD), 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.
PetSmart Waits for SnowPetSmart ( PETM) 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.