Cramer's 'Mad Money' Recap: Why American Growth Stocks Rock
Cramer said that Peltz has taken an interest and turned around dozens of companies in the past, not the least of which were Wendy's (WEN) , Heinz (HNZ) , Tiffany (TIF) , Family Dollar (FDO) and Kraft Foods (KFT) .
If investors had followed Peltz' lead and invested in these names after it was announced that Peltz was involved, Cramer said, they would have gained on average 10% within the next three months, a return that solidly beats the averages during the same periods. That's why Peltz' recent 7.3% stake in the troubled Ingersoll-Rand (IR) should make investors take notice.
Cramer said that Ingersoll is levered to the rebound in housing and construction, making it far more attractive than it once was. Management has now tempered its outlook, making its targets attainable, something investors should reward. The stock is also cheap, trading at 12 times earnings, with a 12% long-term growth rate.
But more important than Ingersoll's business is the possibility that Peltz can unlock value. This shouldn't be hard, said Cramer, as the parts of the company are easily worth 15% more than the current share price.
Facebook: Friend or FoeContinuing with his "Friend or Foe" series, looking into the coming IPO of Facebook, Cramer reiterated that "under no circumstance should you buy Facebook on Friday." He said that with the price range of the IPO heading higher, the chance of a first-day spike is almost assured, meaning there will most certainly be a better time to buy.
To illustrate his point, Cramer looked into the last 10 social media IPOs, companies that included Pandora (P) , Groupon (GRPN) , Zynga (ZNGA) and Yelp (YELP) . He said these IPOs were down an average of 18% since their debut and the odds are good that Facebook will follow suit, at least for a little while.
Only three of the past 10 IPOs have made investors money since their initial offering, noted Cramer, but even with those names, investors could have still made more money by being patient and waiting for a better entry point. LinkedIn (LNKD) , for example, saw its shares fall 30% from it's first-day high before stabilizing and eventually rebounding to make investors money.
Cramer said his bottom line is that no stock, not even a hot IPO, goes up in a straight line and there will always be a better time to buy than on Day 1.