Monro’s Move on Detroit’s Domain

Cramer still believes that auto-service outlets will benefit from Chrysler and General Motors’ expected dealership closings. As drivers lose their local company-sponsored repair shops, they will seek out new places to get their cars tuned up.

That’s why he likes Monro Muffler Brake. CEO Robert Gross said that 3,000 dealerships across the U.S. would shutter, giving Monro the chance to take market share. The company operates in 19 states with 740 stores, and many of them are within five to 10 miles of a closing competitor. Gross, who appeared Thursday on Mad Money, sees the potential for Monro to grow three times its present size just in these areas.

The CEO said he plans to focus on regions in which he already a presence, foregoing a big acquisition – of, say, Pep Boys , which was Cramer’s recommendation – to boost earnings. Gross said that kind of takeover is “too risky” in this market, citing competition in the auto-parts market from AutoZone , Advanced Auto Parts and O’Reilly Automotive , especially considering his firm can generate 20% bottom-line growth without a such a move.

“In this kind of environment,” Gross said, “it’s not the time to risk the company with a transformational deal.”

Cramer predicted an “incremental” and “multiyear gain” from Monro. So investors shouldn’t expect the stock “to double in a year’s time.”

“This is not Research in Motion. This is not Apple,” Cramer said of Monro. “It’s a ‘slow and steady wins the race’ stock.”

Watch the video for Cramer’s full report on Monro Muffler Brake.

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