Cramer's Mad Money - A Mad Week of IPOs (9/27/10)

by: Miriam Metzinger

Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Monday September 27.

IPOs: Campus Crest Communities (NYSE:CCG), China Ming Yang (NYSE:MY), Amyris Biotechnologies (NASDAQ:AMRS), Elster Group (ELT)

This week, nine companies are going public, which makes this the most active IPO week in three years. There is a lot to like from the offerings this week, but Cramer warns that many of them are good for a quick trade, but one is a keeper. Of the IPOs, he thinks Campus Crest (CCG) is "investible." It is a play on the long-term trend of students staying in college longer and needing off-campus housing. The company is growing from 27 to 34 properties by 2011, its properties are newer and more convenient than those of the competition, and CCG yields almost twice as much as its peers at 7%. The IPO should be priced between $12.50 and $14.00.

Ming Yang (MY) is the largest private turbine maker in China and is a hot stock, as investors are looking for a pure play on wind power in China. The IPO should price between $14 and $16, and Cramer expects an 18-19% pop on the first day. After the initial uptick, he would take the money and run.

Amyris Biotechnologies (AMRS) which produces enzymes that break down sugars into fuel, like ethanol. The IPO on Tuesday is expected to be hot and priced between $18-20, but since the technology is not yet commercialized, Cramer would buy the stock as a trade.

Elster (ELT), a 100-year-old German meter play, goes public on Wednesday, with the expected range of $16 and $18 per share. While Cramer thinks this one might be worth holding, since it is a play on energy conservation and is expected to go to $23. However, he recommended caution on ELT, because its revenues are not that high.

Is It Worth It?

Even though stocks are back to where they were before the recession, investors are fleeing stocks. Some fear boomers are not coming back to the market. Cramer blames financial "innovations" that are actually making trading more risky, and the jungle mentality that goes beyond petty corruption and makes it profitable to wreck the entire financial system.

While Cramer thinks there are reasons to worry, he still thinks the best way to make money is by holding high quality stocks with generous dividends.

Luluemon Athletic (NASDAQ:LULU)

Cramer admits he was wrong on Luluemon (LULU), a stock which he thought resembled its $100 yoga pants; "too expensive... too expansive... and definitely too hot to handle." While LULU is up 84% since last year, it has more room to run, given that it is a "lifestyle brand" on a multi-year move. Same store sales are up a staggering 31% whereas most healthily growing retailers report numbers in the mid-teens. LULU is not just a store, it is a club, with yoga classes available on the premises. People feel like it is a privilege to shop there, and the company is adding 12 more stores to its 130 total by next year.

In its September quarter, LULU beat by 6 cents with revenue up 53% over last year. The 20% growth in inventory is a good thing, giving the rising demand for its products. The company is selling at 29 times earnings, which sounds a bit rich, except when taking into consideration its 27% growth rate. With 29% of shares sold short, Cramer thinks the stock can win many more converts.


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