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An Under-the-Radar Bank IPO?

Cramer on Tuesday broke one of his cardinal rules. But, in his defense, he did so in order to help viewers make money.

See, Cramer always warns against buying an IPO in the aftermarket, or the point at which a stock first trades publicly. If you can’t get in on the deal itself – and retail investors rarely can – then just take a pass, he says.

But sometimes an IPO is met with such a weary sigh from Wall Street that investors can afford to wait. And Cramer thinks the collective yawn that will follow First Interstate BancSystem’s arrival on the Nasdaq on Wednesday is just such as occasion.

“I’m hearing that this deal is … so under the radar,” Cramer said, “that there is a chance you can buy even if you are not in on the deal – and still get a reasonable price.”

First Interstate, which will trade under symbol FIBK, will be the first new banking IPO since July 2007. The company operates in Montana, Wyoming and South Dakota, and it holds $5.8 million in deposits, $4.5 billion in loans and runs 72 branches. Cramer is especially excited about the bank’s $16 book value, which is right at the top of the offering’s expected pricing range.

Of all metrics, why the book value? Because legendary investor Peter Lynch used to say that buying a bank at book value was like buying it for the cash on its balance sheet. In other words, it was a steal.

Now, a lot of people think that bank book values these days are overstated due to bad loans, but First Interstate has a far better nonperforming loan rate than its peers. That’s why Cramer thinks the stock is worth buying even up at $16.

Not to mention the fact that First Interstate has plenty of money to buy the assets of its troubled competitors. And Cramer thinks there’s still plenty of consolidation to be had in this space. Plus, the bank plans to issue an annual dividend of 45 cents a share, which, at $16 a share for the stock, gives you a 3% yield.

So forget the flashy IPOs happening this week – unless you can get in on them, of course – and consider First Interstate BancSystem instead.

“At $16 or below,” Cramer said, “I think [FIBK] should end up being a big winner for the patient person’s portfolio.”

Call Cramer: 1-800-743-CNBC

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