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Finding What's Working

After you’ve sold what you need to sell to preserve capital, you can start thinking about buying again. At times like this, with so much to sell (especially after today’s strong close) – banks, brokers, homebuilders – it might feel like finding something to buy is like looking for a needle in a haystack. Fortunately, Cramer thinks the haystack is smaller than you might think and the needles are plentiful.


One of those needles is Chipotle . The company beat consensus earnings per share estimates by 36%. Its same store sales came in just under 12% while the Street was looking for 7%. CMG raised its same store sales estimates going forward; it plans to open 110 to 120 restaurants this year – a 20% increase on the 581 stores they had open last year. This is a truly regional to national growth story, Cramer said.

But the thorn in the side of all food-related companies is food inflation. Jack Hartung, Chipotle’s CFO, told Cramer that despite rising food costs now, Chipotle has always had to pay more in this area as it uses the “best ingredients.” So even though the company’s food costs were worse by 100 basis points this quarter, it is efficient in other areas like labor and utilities. What Chipotle saves on the rest of its P&L, it invests in its food line, Hartung said.

Cramer, who recommended Chipotle on its IPO in January of 2006, thinks this company is “committed to the future.” Once CMG gets three analyst upgrades – right now it has none – Cramer will ring the register, but until then he’s sticking by Chipotle as one place to go that isn’t affected by the mortgage morass.


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