- "Starting with the Lyft IPO, I think individual stock picking is going to start making a bit of a comeback. I sense the excitement, the possibilities, but don't leave it to just the IPOs," CNBC's Jim Cramer says.
- "You just need to be curious, stop paying attention to politics, and pay attention to what you like and what you know, and I think you can make some mad money," the "Mad Money" host says.
- "If you've got some extra mad money that you can afford to risk losing, I'm a big believer in picking stocks so long as you do the homework," he says.
Investors should think about buying some individual stocks as about a trillion dollars worth of companies are due to go public, CNBC's Jim Cramer said Thursday.
Index funds, as promoted by the late John Bogle, typically beat most individual money managers in the long run, but Cramer said some stocks are popping as the major averages make little noise.
The top U.S. indexes all rose about 0.30 percent on the session.
"Starting with the Lyft IPO, I think individual stock picking is going to start making a bit of a comeback. I sense the excitement, the possibilities, but don't leave it to just the IPOs," the "Mad Money" host said. "There's something good going on here in all sorts of high-quality companies. You just need to be curious, stop paying attention to politics, and pay attention to what you like and what you know, and I think you can make some mad money."
Cramer recalled that some cloud stocks popped "dramatically" when they went public, and that investors made money off of Twitter's and even Facebook's IPOs. There has not been a group of household names going public lately, but when they do it starts out steady and then "heats up very fast," he said.
Big names such as Lyft, Airbnb, and Uber are in the lineup this year. Brokers try to "entice you into the casino for the next one," he added.
"They know that if they can price these IPOs at lower levels, where the demand far exceeds the supply, they can engineer a beautiful pop that will beckon more people to put in for the next deals," Cramer said.
Additionally, investors can own some individual stocks to buy and sell after doing homework on the companies, he said. These stocks can be owned with your "mad money," which Cramer explains as excess capital outside of retirement investments that can be used for picking securities.
The host highlighted that PVH popped nearly 15 percent, Lululemon spiked more than 14 percent, and Five Below climbed above 8 percent in Thursday's session. He said the stock jumps at each of these companies could have been spotted
He recalled lessons he learned from investors David Darst, who is a frequent CNBC guest, and Peter Lynch, the former manager of the Magellan Fund at Fidelity.
"David tried to get you to look all around, talk to everybody—taxi drivers, passengers on a train, passerbys, people in elevators—wanted you to find out what they're thinking, what they're doing," he said. "Peter Lynch said you need to buy the stocks of companies you know from your day-to-day after doing some homework, of course, to make sure the business is actually doing well."
PVH, which owns fashion brands such as Tommy Hilfiger and Calvin Klein, was a buy because its CEO Manny Chirico is dependable and has been working on the one division that gave it a shortfall, he said.
Five Below, a growing discount store concept, is expanding nationally, which Lynch has written is a big reason to buy a stock, Cramer said.
Lululemon is a good buy just by doing some research, he added.
"Again, I love index funds. I think they're the perfect vehicle for your retirement fund," Cramer said. "But if you've got some extra mad money that you can afford to risk losing, I'm a big believer in picking stocks so long as you do the homework."
Disclosure: Cramer's charitable trust owns shares of Five Below.