Cramer's 'Mad Money' Recap: What Moves Stocks
Finally, Cramer said he wants to know which brokerages are bringing a deal public. Some, he said, are better than others and have a reputation for doing right by investors. Firms like Goldman Sachs (GS) , Cramer's alma mater, won't stake their reputations on a questionable IPO, while a smaller, lesser-known firm might.
What Do They Do?
Cramer's last step to investing in a coming IPO is to analyze the company itself. What does it actually do? Is it profitable? How big are its end markets? Cramer said all of these are questions that investors need to ask.
For some companies, especially consumer ones such as apparel companies or retailers, it's pretty easy to figure out what they do and how well they're doing it. But for others, including complicated technology or biotech firms, this may be a more daunting task.
But Cramer said a company with large end-markets, one that's profitable and one that's got a great brokerage behind it is what he calls thrice-blessed and has lots of room to run.Lululemon Athletica (LULU) was one such company, he said. The yoga-based apparel maker was tapping into a huge market, was already profitable and had Goldman Sachs behind it. He said this stock continued to grow, even in the tough times of 2008 and 2009, because of its huge potential.
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-- Written by Scott Rutt in Washington, D.C.
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