CNBC’s Jim Cramer on Thursday said companies that perpetually generate “self-help” are poised to do well in this market. In other words, they find ways to grow and perform well despite what might be happening in the broader economy.
He pointed specifically to Chipotle Mexican Grill, saying the restaurant chain can succeed even as the economy starts to slow and inflation remains high.
“When we’re looking for reasons to buy a stock in this environment, we want companies that generate constant self-help. Chipotle does it by improving throughput — how many people that they can serve, say, every 15 minutes,” he said. “It just keeps getting better and better and that’s got nothing to do with GDP or inflation woes.”
The fast-casual chain reported quarterly earnings Wednesday and greatly exceeded Wall Street’s expectations. Chipotle said its traffic increased and sales grew even though it raised prices. By Thursday’s close, the company’s shares were up more than 6%. Cramer added that the burrito maker’s success may also be due to demand, that the company has what consumers want.
This kind of “self-help” may be the “antidote” to the big-picture worries weighing on the market, Cramer said. He added that it’s especially important to look for companies with strategies like Chipotle because factors like increased interest in the bond market will likely continue to hurt equities. But according to Cramer, this challenging environment is not a reason to give up on the market altogether.
“It takes a special kind of stock to do well when the economy’s slowing while inflation just won’t quit,” he said.
“Six to eight months ago, throughput was in the low 20s every 15 min period,” Chipotle CFO Jack Hartung told CNBC over email. “Now we’re approaching the mid-to-high 20s, which is a 20 to 30% increase in speed.”
