GO
Loading...

Cramer’s favorite Latin American restaurants

There are a lot of places you can go for Latin American-style food. Your tummy may say yummy to all of them, but your portfolio may only be pleased by a select few.

"That's why I'm ranking the Latin American style food chains, because you don't just want to own any company in a space that's muy caliente," Cramer said.




CNBC

1. Chipotle

Cramer said, based on long-term fundamentals, Chipotle is his number one choice in the space. "They single-handedly reinvented the idea of fast food by embracing the organic and natural food trend."

He added that the company is facing significant growth and is executing almost flawlessly.

"For years, this company's biggest problem has been the long lines, too many people want their product. So Chipotle figured out a way to increase so-called throughput at peak hours, getting more customers to the register in a given period of time, and the numbers exploded higher."

However, just because Chipotle is Cramer's top choice, that doesn't mean he thinks it's a buy at current levels.

"The stock is far from cheap, trading at 39 times next year's earnings estimates, so if you don't already own it, I would wait for a pullback before pulling the trigger. You never want to chase."

2. Jack in the Box

Cramer said Jack in the Box is his second choice in the space, because it's the parent of Qdoba, a fast service restaurant that offers quesadillas, burritos, nachos and more.

"Relative to the broader industry, Qdoba has, in fact, been doing pretty darned well lately, posting a 7.5 percent same store sales increase in the quarter," Cramer said. The "Mad Money" host cited the company's new products, new ingredients, and updated restaurant design as catalysts driving sales.

And he thinks the company's buyback program is a sign that parent Jack in the Box has confidence in the future.

However, like Chipotle, that doesn't mean the stock is a buy at current levels. "I think you can get a better entry point," Cramer said. "I'd wait for the stock to get hit in the next market-wide pullback."

3. Fiesta Restaurant Group

Cramer first profiled Fiesta Group in July, explaining that it was really a bet on two restaurant concepts: Pollo Tropical, a fast-growing Caribbean themed chain with 150 locations in Florida and the Southeast and Taco Cabana, a slower growing 24-hour Mexican chain with 175 locations.

"I very much like Pollo Tropical," Cramer said. It's expanding at a rapid clip. However, Cramer is far less enthusiastic about the Taco Cabana chain.

"Still, when Fiesta reported last week, the company beat the numbers, with Pollo Tropical delivering healthy 6.7 percent same store sales growth, while Taco Cabana saw a 2.8 percent increase, not particularly good but nevertheless better than expected."

Given the current rate of growth and the enormous potential for future expansion, Cramer said, although it's far from cheap, he still likes it, but only for speculation.

---------------------------------------------------------------
Read more from Mad Money with Jim Cramer
Why is Street preparing for the worst?
Rapid growth company with strong potential
New IPO shows long-term promise
---------------------------------------------------------------

4. El Pollo Loco

Cramer said El Pollo Loco, a chain that specializes in fire-grilled chicken, appears to have a business plan that would make it the perfect play on healthy eating.

"The company markets itself as offering a higher quality, healthier alternative to fast food, and it's been able to deliver same store sales in the mid to high single digits, up 7.2 percent in the latest quarter."

However, there's an issue. "El Pollo Loco is a small company that's the product of a leveraged buyout by private equity firms, and so it came public with a hefty amount of debt. Meanwhile, the stock has already travelled a very long distance in a very short period of time."

Because Cramer can't get behind even the best concept if the balance sheet is a problem, he can't get behind this stock, at least not yet. "I think we have to wait and see if Pollo Loco's management can deliver on their promises of growth while saddled with that ugly balance sheet. So I say sit on the sidelines for now. Wait for the quarter. Let's see how much is sizzle and how much is actual steak… err chicken."

(Click for video linked to this Mad Money segment)

Call Cramer: 1-800-743-CNBC

Questions for Cramer? madmoney@cnbc.com

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Contact Mad Money

  • Showtimes

    U.S.
    Monday - Friday 6p ET
    Australia
    Saturday 8a, 1p, 7p SYD
    Sunday 12a, 1a, 8a, 7p SYD
    New Zealand
    Saturday 10a, 3p, 9p NZ
    Sunday 2a, 3a, 10a, 9p NZ
  • Jim Cramer is host of CNBC's "Mad Money" and co-anchor of the 9 a.m. ET hour of CNBC's "Squawk on the Street."

Mad Money Features

  • Grab the latest CNBC gear from the NBCUniversal Store!

  • Get a behind-the-scenes look at how Cramer formulates his investment advice. "Inside the Madness" is a column, which features e-mails and more with Cramer and his researcher Nicole Urken.

  • You’ve always wanted to hit the “Hallelujah!” button. Here’s your chance.

Mad Money Moments

Cramer's New Book