Jim Cramer: Buy Chipotle if the Stock Falls Below $500

Shares of Chipotle Mexican Grill (CMG) have fallen more than 4% on Wednesday on news that the restaurant chain temporarily shut a Billerica, Mass., restaurant (outside Boston) after four employees became ill.

But TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, shrugged off concerns on CNBC's "Mad Dash" segment, saying that "if the stock goes below $500, I think you should be a buyer."

CMG Chart
CMG data by YCharts

Chipotle has had a challenging few months, with the Centers for Disease Control and Prevention last month concluding its investigation into E. coli incidents associated with the restaurant chain.

The company has been addressing the situation correctly, implementing stringent food safety standards and closing stores when they are affected, Cramer said.

Chipotle also launched an aggressive marketing and promotional campaign to win back customers. The company plans to spend $50 million in the first quarter for the marketing campaign, which will continue through the summer.

"This is just a situation where I think that people will overlook it," Cramer said. "I think these guys are out of the woods."

Although this is "obviously a bad break," he pointed out that Chipotle has bought back a lot of stock and the company has a strong balance sheet.

"There was a great Philadelphia group, Harold Melvin and the Blue Notes, and they had a song called Bad Luck. It's bad luck," Cramer said. "It is a company that is responsible, that is doing the right thing and is trying to get ahead of it." 

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

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