Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday March 17.
Cramer discussed 3 hot cloud IPOs and 3 IPOs to avoid. Paylocity (PCTY) provides cloud-based payroll and human capital management software, and it competes directly with old-school payment processors. It is taking market share and has 40% revenue growth. It is expected to price between $14 and $16 and may be trading at 6 times sales, which is a discount to the industry average. Globoforce (THNX) brings social networking to the corporate world. The software identifies and rewards employees who are performing well and reduces the turnover rate by helping to retrain current employees. The company has an 18% growth in revenues, and its IPO should price between $16 and $18. Q-2 Holdings (QTWO) is a softwar-as-a-service play for banks, and while it is not yet profitable, its billings are up 47%. QTWO has 30% revenue growth. Its IPO may price between $11 and $13.
3 tech IPOs Cramer is much less interested in include A10Networks (ATEN), Amber Road (AMBR) and Borderfree (BRDR). ATEN recently lost a patent infringement suit, Amber Road has too much insider selling, including from the top executives, and while BRDR has a good business model, it has too much competition and not enough customers.
There are 3 biotech IPOs coming up this week, but the one Cramer is interested in is MediWound (MDWD), which has developed a treatment to remove dead tissue from severe burns and other serious wounds. Its therapy was approved in Europe in 2012, but the FDA requires additional trials, and the drug is in Phase 2. Its treatment may be categorized as an orphan drug, which means a higher price tag. The IPO should come public between $14 and $16, and while it could go as high as $22, since profits are pending approval of its drug, which is not going to happen soon, Cramer views this IPO as a trade.
Two other biotech IPOs Cramer is less interested in are Akebia (AKBA) and Versartis. Akebia is developing a drug to treat anemia in those with kidney disease, but there is a competing company with a similar treatment already in Phase 3. Versartis is developing a drug for growth hormone deficiency, but it is only in Phase 2, and is not as big an opportunity as MediWound's Phase 2 drug.
Cramer took some calls:
Ariad Pharmaceuticals (ARIA) is not one of Cramer's favorite biotechs and has lost steam.
Return To Froth: Amazon (NASDAQ:AMZN), Salesforce.com (NYSE:CRM). Other stocks mentioned: Hawaiian Holdings (NASDAQ:HA), Alaska Air Group (NYSE:ALK), American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL)
The Dow roared 182 points on Monday, which signaled a victory for the bulls. Many investors, particularly hedge funds, were short going into Monday because of geopolitical tensions, worries over China, companies reporting lackluster earnings because of the weather, the faltering of momentum stocks like Amazon (AMZN) and Salesforce.com (CRM) and concerns about froth returning to some sectors. Cramer thinks that the froth might continue, and given the fragility of the world situation, he would exercise caution.
Cramer took a call:
Cramer discussed GT Advanced Technologies (GTAT), SunEdison (SUNE) and Incyte (INCY), three momentum stocks with possibly more room to run. All three, Cramer cautioned, are speculative.
GTAT has doubled over the last 6 months and has returned 500% in the last year. The company makes equipment for solar and sapphire LED products. Demand for both categories is heating up, as sapphire might replace Corning's (GLW) glass in gadgets. GTAT has a deal with Apple (AAPL) and is likely to attract more interest from tech companies. If GTAT pulls back, Cramer recommends buying.
SunEdison makes silicon wafers for solar equipment and has a pipeline of diverse products. It is now able to spin off its semiconductor segment, and Cramer thinks the spinoff will create value. INCY has rallied 180% since last year. It has a treatment for blood disorders and cancer drugs in Phase 2 trials. The main drug has seen a 74% increase in sales from 2012, and INCY is likely to turn a profit by next year.
Ensco (ESV) raised its dividend but saw its yield rise higher because of a steep decline in its stock price. Deepwater drillers are facing downgrades on Wall Street. Transocean (RIG) is down 20% and Seadrill (SDRL) has been decimated so that it now yields 11%. However, analysts love the onshore players because of new discoveries. This preference is not necessarily wrong, but Cramer questions the timing. Why be bearish on RIG, ESV and SDRL when they are already down dramatically, but get behind Halliburton (HAL) when it has already risen 13% and Baker Hughes (BHI) following an 11% gain. It seems that these analysts are late to the party, and Cramer prefers to buy beaten-down offshore drillers than their well-loved onshore counterparts.
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