August 7th - PLCE GYMB CPKI

Cramer started out by bashing the teen apparel companies citing high competition. He suggested switching focus to the children's apparel group namely PLCE The Childrens Place Retail Stores, Inc. and GYMB Gymboree Corp.. Cramer said PLCE was his favorite of the two.

PLCE
Closing Price: $56.53

GYMB
Closing Price: $31.60
After Hours Price: $31.99
Percent Increase: 1.2%
Trades on NASDAQ
Sector: Consumer Goods
Short %: 8.5%
Days to Cover: 2.7
% Held By Insiders: 1.5
% Held By Institutions: 96.4

Another HUGE institutional holding stock pick in GYMB. The last time this happened (last week) was MAS that had 91% institutional holdings and had a very strong day the day after Cramer recommended it and didn't show any Cramer effect price drop. In fact the stock, much like GYMB, didn't go up very big after hours and even traded at the previous close in the pre-market the next day before taking off shortly after the opening bell. Needless to say that obviously has me concerned about a short here.

Next Cramer looked at high multiple stocks that have been getting hit pretty hard lately. The reasons for this "multiple contraction" are:

1) Interest rates and inflation
2) Stocks shouldn't trade above twice the growth rate
3) Priced for perfection but can never deliver perfectly
4) Companies need to beat numbers, not just meet if they hope to hold their multiple
5) People will take their profits as it starts to come down

No picks made here, just some examples of stocks that have already been hit. Cramer did say that HANS Hansen Natural Corp. is the least likely to come back from their "multiple contraction". He then said SBUX Starbucks Corp. was the better bet to rebound from their drop.

Finally Cramer had the CEO from CPKI California Pizza Kitchen Inc. on, and Cramer explained it as a regional to national play. The stock was up after hours before Mad Money aired because it reported earnings after the bell, so the few trades from people buying off Cramer's recommendation have only brought the shares up 14-cents, not the entire 92-cents the stock is up after hours. Again, I would be worried what might happen to a stock like this the next day off a Cramer recommendation and an earnings report. I think the earnings news would trump any sort of Cramer effect and make it harder to predict a fall.