This article presents an overview of Jim Cramer Talks About 5 Consumer Stocks As Americans Push Back on High Prices. For a detailed overview of such stocks read our article, Jim Cramer Talks About 10 Consumer Stocks As Americans Push Back on High Prices.
5. Chipotle Mexican Grill, Inc. (NYSE:CMG)
Number of Hedge Fund Investors: 56
Jim Cramer in a latest program praised Chipotle Mexican Grill, Inc. (NYSE:CMG) since Chipotle Mexican Grill, Inc. (NYSE:CMG) was able to increase prices without facing any major effects on its sales. That’s because, according to Cramer, Chipotle Mexican Grill, Inc.’s (NYSE:CMG) customers “think it’s worth it…something you hardly ever see.”
Last month, Cramer said Chipotle was one of those “self-help” stocks that keep growing despite the broader economic situation.
“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,” Cramer had said.
Chipotle Mexican Grill, Inc. (NYSE:CMG) shares have gained about 44% so far this year.
Rowan Street Capital stated the following regarding Chipotle Mexican Grill, Inc. (NYSE:CMG) in its first quarter 2024 investor letter:
“The best investment ideas are simple. We have previously written about Chipotle Mexican Grill, Inc. (NYSE:CMG). It turned out that this was our best investment idea since starting the fund. The stock is up 10x since we first invested at the end of 2017 (~47% annualized). Sounds absolutely incredible, except that your managers sold CMG back in 2018 (thinking that the stock had gotten ahead of itself), and proudly booked an 85% profit in 6 months, patting ourselves in the back. Interestingly, when we wrote about this in our 2019 letter, describing our big mistake to sell, the stock still went up +270% since that letter, delivering an impressive 30% annual return. This is an incredibly important point! You do not get many Chipotles in your investing career. Companies like these are super rare and the opportunity to buy them at an attractive price (which we got in 2017) is even rarer. Booking a quick profit, paying the capital gains tax and thinking that you will find another CMG to invest your proceeds into is usually delusional.
Along with our personal investment case of CMG, let us compare that to the experience that Bill Ackman had with the same investment. He is a famous hedge fund manager that we greatly admire, who has achieved an incredible track record in the past 20 years running Pershing Square. Bill Ackman has owned the restaurant stock since the third quarter of 2016 at an initial cost basis of about $411 per share (our cost basis was $289). Originally, Mr. Ackman bought 2.88 million shares. He was wise to hold on to CMG stock and it still is the top position in his fund (18% weight). But, if you follow his 13F filings, which are the public filings disclosing large investment manager’s holdings of publicly traded securities, he kept trimming his position as the stock went up. We calculated that if he just sat on his original 2.88 million shares and didn’t sell a share, his position would be worth $8.8 billion today. This would represent ~50% of his entire firms’ assets under management (AUM). But he only has $1.8 billion invested in CMG as of Q1 2024. As Charlie Munger said: ““The first rule of compounding is to never interrupt it unnecessarily.”…” (Click here to read the full text)
4. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Investors: 57
Jim Cramer said that Costco Wholesale Corporation’s (NASDAQ:COST) items have “always been a bargain” as he predicted that both Costco Wholesale Corporation (NASDAQ:COST) and Walmart will do well.
Madison Sustainable Equity Fund stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its fourth quarter 2023 investor letter:
“Costco Wholesale Corporation (NASDAQ:COST) reported solid holiday results and announced a special dividend of $15 per share. Earnings were better than expected driven by better gross margin. Same store sales were 3.9% with solid traffic. Costco also noted better discretionary trends and solid seasonal sales.”
3. Starbucks Corp (NASDAQ:SBUX)
Number of Hedge Fund Investors: 59
Cramer said in his latest program that he knows Starbucks Corp (NASDAQ:SBUX) has “disappointed” and Starbucks Corp’s (NASDAQ:SBUX) coffee is “pretty expensive.” He thinks Starbucks Corp (NASDAQ:SBUX) coffee has always been expensive.
Cramer said Starbucks Corp (NASDAQ:SBUX) is not mulling any price cuts. Instead, the company is adding more menu items that could lead to “worst through puts” which according to Cramer is another “unacknowledged problem among many.”
Cramer said that owning Starbucks Corp (NASDAQ:SBUX) for his charitable trust has been “nothing short of a brutal experience.”
Vulcan Value Partners stated the following regarding Starbucks Corporation (NASDAQ:SBUX) in its first quarter 2024 investor letter:
“We are pleased to have purchased Starbucks Corporation (NASDAQ:SBUX) in the first quarter. We have owned the company in the past, and it was a good investment for us. The company has strong brand recognition, global distribution, and outstanding retail real estate. The company generates robust free cash flow and has high returns on invested capital as well as a strong balance sheet. Starbucks has used its financial resources to strengthen its brand and enhance customer loyalty. Additionally, the company has continued to see attractive returns from opening new stores. Stock price volatility over the last year is likely due to management changes, disappointing short-term results, and general hesitancy about consumer spending. We believe that Starbucks’ competitive position remains intact, and its value will continue to compound over our five-year plus time horizon.”
2. McDonald’s Corp (NYSE:MCD)
Number of Hedge Fund Investors: 63
Jim Cramer thinks McDonald’s Corp (NYSE:MCD) “failed the test” of surviving the current consumer pushback against inflation because burgers just “cost too much.” Cramer said McDonald’s Corp’s (NYSE:MCD) burgers don’t “come off as a bargain.”
Horizon Kinetics stated the following regarding McDonald’s Corporation (NYSE:MCD) in its fourth quarter 2023 investor letter:
“The next major development for the industrialized economies was the opening of “denied areas.” It’s not a familiar term today, but it would be found in books on geopolitics written before the collapse of the Soviet Union. It referred to the Soviet Union and China, and simply meant that businesses couldn’t expand there.
For instance, prior to 1990, it was inconceivable that someone would assert that McDonald’s Corporation (NYSE:MCD) was going to open a store in Moscow, or even Bucharest or Warsaw. But it ultimately happened. And then in Shanghai and other Chinese cities. So, in addition to the disinflationary commodity and labor impacts, the third miracle for Western economies was that all the major consumer brand companies that could only expand globally within the context of what we then called the free world, could now be truly global. Much expansion ensued, growth that could not otherwise have occurred…” (Click here to read the full text)
1. Walmart Inc (NYSE:WMT)
Number of Hedge Fund Investors: 85
Cramer said the “takeaway” in all this inflation-related effects on food prices and change in consumer behavior is that Americans prefer items that Walmart Inc (NYSE:WMT) and Costco give them. These items have “very low price” and they “feel like bargains,” Cramer added.
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