Cramer said Chipotle is likely fairly valued at its present 34 times earnings. He said a Panera-style multiple of 25 would be a floor for Chipotle, while Whole Foods would likely be a new ceiling. But with Yum Brands ( YUM) citing a 13% rise in sales at low-end Taco Bell, the trade-down play is clearly happening, said Cramer, which means Chipotle shouldn't be owned until it hits 30 times earnings, or $270 a share. Chipotle isn't the same company we knew last week, Cramer concluded, which is why we must now wait for its valuation to come back into line.
Here's what Cramer had to say about callers' stocks during the "Lightning Round": Thermo Fisher Scientific ( TMO): "I like this business and I think it's inexpensive. I want to buy it." Frontier Communications ( FTR): "No, no, no. I've gone back to CenturyLink ( CTL)." Hess ( HES): "Too poorly managed. Sell, sell, sell. I do like the oils though." Netflix ( NFLX): "That is the hardest stock in the world. I don't know what they will do next." Monster Beverage ( MNST): "I think that business is good but no one wants to pay that multiple. "
On the Horizon
In the second "Executive Decision" segment, Cramer spoke with Brian Jordan, chairman, president and CEO of First Horizon ( FHN), a regional bank whose shares fell 5% after reporting earnings despite the company already having one of the cheapest valuations in its sector. Jordan said there are a number of things affecting bank valuations. Despite having strong core fundamentals and an improving capital markets business, the overhang from the mortgage crisis still weighs on First Horizon's stock. When asked about the lingering mortgage morass, Jordan said his bank is on the back side of the crisis and feels they now have enough reserves set aside for any mortgage repurchases that may come along. Turning to the question of what is a fair valuation for First Horizon, Jordan said that tangible book value is an important reference point as it takes into consideration many of the bank's core fundamentals. He said First Horizon's business is in line with an economy growing at 1% to 2% a year but also of a bank that's been able to take a little market share from its competitors.