Jim Cramer wants to take a moment and give investors a big reality check when it comes to Chipotle. The stock was slammed on Wednesday after it reported earnings because of the same two issues that have plagued it all year: pork shortage and a future of tough comps.
But was the market right to burn Chipotle as bad as it did?
To answer this question, Cramer said to look no further than how the stock has performed in the past. In March 2014, the stock peaked at $614 before reporting earnings. Then, on April 17, it announced a great quarter but admitted that food costs would go higher on account of rising beef, avocado and cheese prices.
The stock then was slammed hard, trading down to $474 10 days later, once investors fully digested the negative outlook.
Ultimately, the stock rebounded again and rallied up to $727 in February 2015. However, once again the stock was hit, this time by tough comparisons and the dropping of a pork vendor.
Cramer suspects that many investors thought that the company's pork problem would be easily solved, which explains why the stock ran into the quarter. So, when they heard that Chipotle's same store-sales were only 10.4 percent and were expected to slow down, the worry transferred to the stock.
"I say the problem is with the stock, not the company, because there is really nothing new here," the "Mad Money" host said.
Seriously! The company still has the same values it stood by initially, and nothing has really changed. Chipotle still passionately cares about animal rights, which accounts for the reduction in pork availability. And while other companies might be comfortable with raising pigs in unacceptable conditions, Chipotle does not.
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Looking at the bottom line, Chipotle is making $500,000 more per store than it did three years ago and has added 600 new locations since that time. But Cramer thinks that what is really driving its amazing sales is the fact that Americans increasingly hate fast food and want the natural options provided by Chipotle.
"I think we are back to a 2014 scenario, where the expectations have come down and those who want in for the long haul need to make their move in the next few days," Cramer warned.
Nothing new! This stock drop is consistent with historical patterns, and it is still the same good company that Chipotle always was. This is why Cramer wants investors to buy, buy, buy before the stock gets its sizzle back.
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