Jim Cramer thinks a great restaurant shake-out has begun.
“We are seeing some restaurant names pull away from the pack the way racehorses separate themselves from the field … whatever the explanation, the winners are creating some dazzling performance,” the “Mad Money” host said.
The first winner crushing the competition is McDonald’s. The all-day breakfast idea was once one that was laughed at on Wall Street, and it has now rocked the quick-serve world. Jack in the Box, Popeyes and even DineEquity have felt the wrath of rejuvenated McDonald’s.
“I think the winners are all worth owning, many right here, and the rest on pullback.”
Cramer was also stunned by the double-digit same-store sales thatDomino’s delivered, with endless innovation in technology that did some serious damage to smaller pizza companies that couldn’t possibly compete.
“The fact that prices haven’t gone up in five years tell you all you need to know about the value proposition,” Cramer said.
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Many investors also can’t figure out how Chipotle went to $533 on Monday when it was at $400 less than two months ago. Investors underestimated two things, Cramer said. First was the strength of Chipotle’s balance sheet that allowed it to buy back stock, and the long-term value of fresh and organic food. Cramer was also impressed with the strength of both Panera and YUM Brands.
These companies have so much going for them, it is clear that the winners are McDonald’s, Chipotle, Panera and YUM. Meanwhile, the losers are ones like Shake Shack, which was slammed in after-hours trading on Monday even after it reported a top and bottom line beat.
“I think the winners are all worth owning, many right here, and the rest on pullback,” Cramer said.