Don’t chase Starbucks stock now that activist investor Bill Ackman has revealed his $900 million stake in the company, CNBC’s Jim Cramer said Tuesday.
For one, the stock has been “going up straight” since Starbucks announced in July that it was working on getting things right and bought back shares, Cramer said on “Power Lunch.”
“If you come in at this level, you may end up being a little disappointed,” he added.
Starbucks stock jumped more than 2 percent Tuesday afternoon on the news that Ackman’s fund, Pershing Square Capital, now has 15.2 million shares of the coffee chain.
However, Cramer doesn’t think there’s much Ackman can do on the activist investor side. Instead, Ackman is probably “along for the ride,” the “Mad Money” host said.
“If you come in now expecting that Ackman is going to demand certain things – well, I’m sure Ackman’s a happy camper,” he noted. “A lot of things have been right but there is no need to chase if this quarter is not going to be brilliant. And I don’t think this quarter is going to be brilliant.”
Cramer said he believes the U.S. is still going to be tepid for Starbucks, thanks to traffic issue and what he thinks are price differential issues.
“The thing that most concerns me about Starbucks is a bit of the price point and I think that is something that is going to be difficult,” he said.
That said, he thinks CEO Kevin Johnson is doing a “remarkable job” and called the chain’s Reserve Roasteries a “fabulous investment.”
“Boutique coffee is where the holy grail is,” Cramer said.
