On tonight’s MAD MONEY on CNBC, Jim Cramer said despite a sweet close it isn’t time to celebrate.  In a preservation of capital strategy and cutting losses will generate gains anyway.  He thinks the market will gap up tomorrow and that is a good chance to sell.  The domino effect is many people walking away from homes, and homebuilders are not able to sell their inventory.  Some of the banks and mortgage brokers will fail over these loans and if they look cheap they are not.  The hedge funds and aggressive managers can’t borrow what they thought they could because of forced selling.  He thinks anything mortgage related should be sold into any strength tomorrow.

Jim Cramer wanted to talk about selective bull markets and said the best company he has in the food space is Chipotle Mexican Grill (NYSE:CMG).  He says this is a regional to national story that beat estimates and raised guidance.  He interviewed Chipotle’s CFO on the show:

Cramer asked about food costs being up….. costs are higher and theirs grew 100 basis points, but they have food integrity and solid contracts.  The rest of the P&L statement is very efficient.

Cramer’s concern is on the slowness of the buildout and then changing to rapid growth….. CFO said they are growing based on real estate availability and the quality of managers they can get.  Managers are coming from inside now and they can do better now than earlier.

How do they incentivize managers?  Elite managers are bonused on sales growth above expectations above plan plus they get $10K per group leader that gets turned into a manager.  As far as feeling like a chain….CFO said he doesn’t want it to feel like a chain and they want to personalize the experience.

Cramer noted that the stock hasn’t even seen upgrades after a 12% gain today on the better performance and Cramer said he thinks Chipotle will go up Thursday again.  Shares climbed nearly another 2% to yet another high, above $100.00.

Jon C. Ogg
August 1, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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