Acacia is a supplier of parts for the optical networking space, with products relied on by cloud infrastructure operators and internet service providers. It makes digital signal processors and optical interconnect modules that play an important role in the physical infrastructure of the internet.
Basically, it takes digital signals from network equipment and converts it into an optical signal so that it can be transmitted through fiber-optic cable. It then turns the optical signal back into a digital one for computers to understand.
Cramer noted that the company is on fire because it is disrupting the market that it operates in. Acacia sells low-power silicon-based products that provide better performance at a lower price point than its competitors.
The company also provides exposure to some of the hottest areas in the optical network space, such as the metro market. Those are city-wide networks that need to provide a lot of bandwidth without consuming too much power.
"This combination of Acacia's proprietary advantage with these fast-growing end markets is producing some spectacular numbers," Cramer said.
Acacia's revenue growth accelerated to nearly 79 percent in the first quarter of 2016, up from 63 percent in 2015. Its gross margins and sales have also dramatically expanded.
"No wonder Acacia is on fire. It's an IPO that is actually profitable, and not only that, the company has a pristine balance sheet with no debt and nearly $130 in cash thanks to the proceeds from the deal," Cramer said.
The bull thesis behind the stock is that Acacia will start to attract larger and more important networking customers going forward.
However, Cramer noted the risks associated with Acacia, as it currently receives more than 80 percent of its sales from its top five customers. Additionally, the optical business tends to be choppy, with chunks of revenue coming in all at once followed by slower periods. That means Acacia could report a disappointing quarter eventually.
"I really hate it when the expectations get ahead of themselves, but I also hate missing a great growth story because I was too worried about where a stock came from and not where it is going," Cramer said.
Cramer said if investors can buy the stock on a pullback, it could be worth putting a small position before it reports in two weeks. However, the stock is only for those who are willing to speculate and accept the risks.