Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday August 25.
Homicides in the Restaurant Sector: Noodles (NASDAQ:NDLS), Bloomin' Brands (NASDAQ:BLMN), Red Robin Gourmet Burgers (NASDAQ:RRGB), Pot Belly (NASDAQ:PBPB), Chuy (NASDAQ:CHUY), Pollo Loco (NASDAQ:LOCO). Other stocks mentioned: Mondelez (NASDAQ:MDLZ), Kraft (KRFT)
There has been a list of "homicides" in the restaurant space, with hot food ideas getting slaughtered. Cramer looked at some "left for dead" restaurant stocks, like Noodles (NDLS), Pot Belly (PBPB) and others. When these stocks report any disappointment, they tend to get taken out and shot. Cramer doesn't think any of them are worth buying. Even as the stocks have dropped, their valuations are still high.
Red Robin Gourmet Burgers' stock has fallen more than 30%, because the quarter was a "monster earnings miss." Cramer wouldn't touch the stock "with a ten foot pole."
NDLS was one of the most "hyped" stocks in the space. It doubled on its IPO, but when management blamed weather for weakness, the street started to see trouble. Even when the weather was good, it reported an earnings miss and low same store sales.
PotBelly rallied 120% on its IPO and has been "cut to pieces" ever since. Its same store sales growth has been a mere 2.5%, which doesn't justify the hype.
Bloomin' Brands came public 2 years ago, and is down 32% so far this year after it reported a "hideous" quarter.
Cramer took some calls:
Mondelez (MDLZ) and Kraft (KRFT) are both good because they are both challenged, and might get a bid.
On a record day for the S&P 500, there are still some skeptics who think the market move is false. We might not be done going higher, said Cramer, and this move is not necessarily fake. Many companies are pursuing takeovers to increase growth. Burger King (BKW) may take over Tim Hortons (THI), and this isn't just another tax inversion story. The main motivation is the need for higher growth. Another reason for M&A activity is the need to take out competitors. Cramer is hopeful about the market.
Cramer took some calls:
ebay (EBAY) a split-off of Paypal would be a good idea. Cramer thinks it would be a win for everyone.
Cliffs Natural Resources (CLF) Cramer is not happy about the buyback, because the fundamentals are not strong.
Starbucks (SBUX) had an excellent quarter. Cramer thinks people will circle back to Starbucks.
CEO Interview: Cheryl Bachelder, Popeye's Louisiana Kitchen (NASDAQ:PLKI)
Popeye's Louisiana Kitchen (PLKI) has suffered a bit from its exposure to the volatile restaurant industry, but CEO Cheryl Bachelder is confident the restaurant could double its locations. Bachelder is happy with the company's decision to buy back the rights to its original recipes; previously the company was paying $3 million in royalties annually. She also discussed a generous buyback.
CEO Mark Trudeau, Mallincrokdt Pharmaceuticals (NYSE:MNK)
CEO Mark Trudeau of Mallincrokdt Pharmaceuticals (MNK) says that his company is not merely a tax inversion play; it has always been based in Ireland, where the tax burden happens to be lower. The company has benefited from acquisitions: Cadence and Questcor. In addition, MNK bought Acthar gel, which has multiple applications.
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