If you find yourself debating whether Netflix (NFLX) – Get Report is still a growth stock or whether AMC Entertainment’s (AMC) – Get Report valuation is justified, you’re missing the point, Jim Cramer told his Mad Money viewers Wednesday. There are plenty of companies that are doing everything right, and rewarding shareholders in the process.
There was much debate today as to whether Netflix‘s growth still warrants making it the “N” in FAANG. But Cramer said when you find yourself debating growth rates, the debate is usually over. Likewise with those still speculating on the perfect valuation for AMC Entertainment. AMC was only kept alive by selling stock at inflated prices to the Reddit crowd. That makes speculating on AMC a zero-sum game.
Cramer told viewers that rather than getting caught up in these distractions, they’d be far better off focusing on companies doing everything right. Companies like Chipotle Mexican Grill (CMG) – Get Report, which soared 11.5% Wednesday on sales that rose 10.5%.
How is Chipotle still hitting it out of the park? Culture. Cramer said Chipotle’s customer-centric innovation has turned it into a digital lifestyle, with pickup, delivery and drive-through options for great food that customers love.
Chipotle is still a growth story, with the ability to double its store count in the U.S. That’s why it’s still worth owning.
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Know Your IPO
In his “Know Your IPO” segment, Cramer reminded viewers the the every market is bound by the laws of supply and demand. Right now, supply is far outstripping demand, with 19 deals coming this week alone. And while Cramer deemed the vast majority of these deals “absolute garbage,” there is one that stands out, Doximity (DOCS) – Get Report, the health information platform for doctors.
Doximity is a social network for doctors and doctor’s offices that makes its money from advertising. The company has been around for 11 years and unlike most IPOs, is profitable.
Shares came public back in June at $41 and rose into the mid-$60s before pulling back into the $40s. Shares closed today just over $55 and are up 12% this week.
At these levels, Doximity trades at 35 times sales, which is pricey, but Cramer said with 34% revenue growth, this is one cloud platform worth watching. He said he’d be a buyer on any market-induced weakness going forward.
Off the Charts
In the “Off The Charts” segment, Cramer checked in with colleague Carolyn Boroden, the “Fibonacci Queen,” to make sense of the market’s recent decline.
When Cramer last spoke with Boroden, she correctly predicted a sharp decline in the S&P 500 coming between July 13 and July 15. Like clockwork, the market peaked as predicted.
Boroden also noted that the market’s recent decline lasted just three days, just as it did in March, twice in May and again in June, signaling that it’s likely clear sailing from here.
Boroden’s new forecast indicated that if the S&P stays above resistance at 4,359, its next likely target is between 4,437 and 4,492. For investors looking to invest with a single stock, Boroden suggested Amazon, which shows a similar pattern, with support between 3,490 and 3,508 support and a likely target of 3,847.
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