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NEW YORK ( TheStreet) -- The market loves gadgets, especially shiny ones, Jim Cramer said on Mad Money Tuesday, speaking about -- what else? -- Apple ( AAPL - Get Report) , a stock he owns for his charitable trust, Action Alerts PLUS.
Cramer said Apple's stock initially popped on Apple's latest round of product announcements, getting pulled down only by the chatter surrounding the Federal Reserve that took all stocks lower by day's end. But regardless of the today's stock price, Cramer said Apple is a stock that shouldn't be traded, it should just be owned for the long term.
Cramer thinks Apple Pay, Apple's new secure payment system will be a big winner given that MasterCard (MA) , Visa ( VISA) and American Express (AXP) along with countless other merchants are already on board.
Cramer was also excited about the Apple Watch, which may only appeal to some initially but will likely garner a broader appeal with subsequent generations. The Apple Watch's big draw will be its fitness tracking capabilities, he said, which will draw in the younger generation.
Apple is a serial innovator and is the most innovative company of our time, and possibly of all time, Cramer concluded.
Off the Charts
With the upcoming Alibaba initial public offering, the biggest IPO in history, Cramer went "Off The Charts" with colleague Ed Ponsi to figure out which Internet stocks portfolio managers are likely to sell in order to make room for this record-setting newcomer, and when will be a good time to snap them up into that weakness.
Ponsi noted that Facebook has just completed a classic cup-and-handle formation and hasn't looked back. He thinks the stock still has more upside, but as the pressure builds from Alibaba he'd be a buyer at $72 a share. That was the stock's March high and is currently where its 50-day moving average is, making that level an excellent floor of support.
Ponsi then looked at Google's Class A shares, noting this stock should be bought as it approaches its uptrend line, currently $570 a share, or $22 less than where the stock is trading today.
Finally, there's Apple. Ponsi said that $97 a share is Apple's key level to watch and he'd be a buyer at that level because it represents both the stock's uptrend line and its 50-day moving average.
Chipotle vs. McDonald's
American consumers are changing their ways, Cramer told viewers, and nowhere is that more evident than comparing Chipotle Mexican Grill (CMG - Get Report) to McDonald's (MCD - Get Report) , its former parent.
Cramer said the dichotomy between these two fast food restaurant chains couldn't be more stark. Chipotle is seeing same-store sales accelerate with expanding margins while McDonald's is seeing shrinking sales with margins under pressure. Chipotle's shares are a permanent fixture on the "new high" list, up 26% for 2014, while McDonald's is down 6% for the year.
While Chipotle continues to amaze, McDonald's just reported abysmal earnings, Cramer continued. If not for the fact that McDonald's sports a 3.5% dividend yield and has a ton of cash, shares would have been down a lot more on these most disappointing results.
Consumers are getting wise to their unhealthy ways, Cramer concluded. Whether its a shiny new fitness tracker from Apple or choosing to eat healthier, eventually the younger, more informed generation is changing for the better.
Hungry for Food Companies?
With the news that General Mills (GIS - Get Report) is buying Annie's (BNNY) for a hefty 37% premium, Cramer said it's clear that the traditional food chain is surrendering to the natural and organic players, making him wonder, who's next?
Cramer said the Annie's deal is a huge development in the food space because it means other players like Hain Celestial (HAIN - Get Report) and WhiteWave Foods (WWAV) are worth a whole lot more than anyone thought. But more importantly, given that Annie's is a second-rate, inconsistent company, Cramer said it's also clear that traditional food companies are willing to do anything to get into this red-hot segment of the market.
That means companies like Boulder Brands (BDBD) is also a likely takeover target. Boulder, Cramer noted, is a major player in gluten-free products, a growing trend that's getting more popular. Given the valuation paid for Annie's, Cramer said Boulder could fetch a 71% premium if investors are able to get in early.
With Lifetime Fitness (LTM) , operator of 112 fitness centers, recently announcing that it's exploring the possibility of converting into a real estate investment trust, news that sent shares up a quick 60%, Cramer said it's time to explain exactly what a "REIT conversion" is and how investors can profit from them.
Cramer explained that REITs must return 90% or more of their profits to shareholders in the form of a dividend, effectively eliminating the company's tax bill and passing most of the tax burden onto shareholders. That's why so many companies, from timber and department stores to hospitals and now fitness centers, find converting to a REIT so appealing.
Because REITs return more of their income to shareholders, the markets overall tend to pay more for REITs, adding to their appeal. There are currently more than 200 mutual funds and exchange-traded funds that trade exclusively in REITs, Cramer said.
In the case of Lifetime, Cramer said the company will likely split itself into two -- a REIT that owns the real estate and the fitness company that leases those facilities. Not all companies are allow to convert, Cramer said, but those that are reward shareholders with both higher stock prices and higher dividends, making it worth the hassle of converting.
How much would Lifetime be worth as a REIT? Cramer said the REIT is worth $25 a share, while the operating company would add another $35 a share, conservatively, or $60 a share, 21% higher than today.
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-- Written by Scott Rutt in Washington, D.C.
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