Jim Cramer's Top Takeaways: Noodles & Co., Shake Shack, Alliance Data Systems

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.


NEW YORK (TheStreet) -- Did you miss last night's "Mad Money" on CNBC? If so, here are Jim Cramer's top takeaways for today's trading.

NDLS Chart
NDLS data by YCharts

Noodles & Company (NDLS) : When a high-flying growth stock loses its mojo, look out below! Cramer said this high-flying stock tripled in the days following its 2013 IPO, but ever since has failed to meet even its own expectations.

Noodles has missed estimates for six consecutive quarters, failing to beat on either the top or bottom line. The company's same store sales have been faltering, along with its gross margins, all leading to a 29% decline in the stock in just the past month, after the company reported its latest disappointment on May 5th.

So what's wrong at Noodles? Chalk it up to a management team that was way too optimistic and promotional just after its initial public offering but is now failing to execute.

On its latest conference call, management again tried to spin its ailing same store sales by noting that if you excluded weakness in three markets, sales were actually up 3.2%. What they failed to mention, however, was the three markets they excluded, which included their home turf of Colorado, account for nearly a third of the company's overall sales.

Yet despite all its failings and its decimated stock, shares still trade at a hefty 32 times earnings, more than Chipotle Mexican Grill (CMG) , which is growing far faster and a far more reliable company.

SHAK Chart
SHAK data by YCharts

Shake Shack (SHAK) : What's behind the meteoric rise of Shake Shack? No, it's not the burgers, Cramer warned, it's a flawed short-selling process.

Shake Shack has an extremely tiny number of shares available for sale, only 5.6 million. Of that "float," the underwriters of Shake Shack's initial public offering did an excellent job of placing many of those shares with believers in the company who are not prone to sell at the drop of a hat.

But despite this tiny number of available shares, nearly 43% of Shake Shack's shares are indeed sold short, betting on the company to make a misstep and prove their negative thesis correct.

So when the company delivered strong results, with an unexpected profit to boot, there simply weren't enough shares to go around. That forced brokers to close out short positions at any price, known as "bringing in" a position, sending the price soaring.

ADS Chart
ADS data by YCharts

Alliance Data Systems (ADS) : Cramer sat down with Ed Heffernan, president and CEO at Alliance Data, the marketing and loyalty solutions company with a stock that's up 19.6% so far in 2015.

Heffernan called Alliance Data the biggest company you've never heard of, the guts behind many of the largest loyalty programs out there, helping retailers collect information about their customers and drive incremental sales.

Heffernan said that while not all retailers use all of the services his company offers, Alliance Data is able to use its SKU-level knowledge of customers to reach out across multiple channels including social and mobile to deliver targeted messages.

In years past, much of a company's marketing was dedicated to broad brand messages, Heffernan noted, but those days are over and today, companies must use targeted campaigns to reach customers and potential customers.

Cramer said this has been a winning stock for ages and investors need to educate themselves on the company and all it does.

To read a full recap of "Mad Money" on CNBC, click here.

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

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

If you liked this article you might like

Futures Up After Lukewarm Jobs Report Friday

Futures Up After Lukewarm Jobs Report Friday

Surprise Arrest of Saudi Billionaire Alwaleed Bin Talal Overshadows Big Earnings

Surprise Arrest of Saudi Billionaire Alwaleed Bin Talal Overshadows Big Earnings

Buffalo Wild Wings Bottom Line Gets Fat on Boneless Wings

Buffalo Wild Wings Bottom Line Gets Fat on Boneless Wings

McDonald's Is Beating the Pants Off These Guys -- but Not the Ones You Think

McDonald's Is Beating the Pants Off These Guys -- but Not the Ones You Think

Most Restaurant Stocks Remain Tough to Swallow

Most Restaurant Stocks Remain Tough to Swallow