CNBC's Jim Cramer on Friday recommended investors snatch up shares of GlobalFoundries, a chipmaker owned by Abu Dhabi's sovereign wealth fund that went public a day earlier.
The "Mad Money" host said he thought the deal flew a bit under the radar, a surprise given it was the third-largest IPO of the year and the fact the global economy remains in the midst of a chip crunch.
"I think the semiconductor shortage will persist for far longer than we'd like, which is bad news for the global economy but fantastic news for GlobalFoundries. That's why I think it's a buy," Cramer said.
GlobalFoundries' business, like that of all chip manufacturers, has historically has been expensive and relatively low margin, Cramer said. However, Cramer said the company's financials have been improving over the years and now in 2021 they're "doing incredibly well."
Revenue in the first six months of 2021 rose more than 12% on a year-over-year basis, Cramer said. "If anything, the preliminary results for the third quarter look even better. We're probably looking at 55% revenue growth ... and 80% EBITDA growth, which is nuts."
"Put it all together and there's a lot to like with this one," said Cramer, who also highlighted GlobalFoundries operations in the U.S. at a time when relocating supply chains back in America has been a big talking point. Additionally, the company's chips are "tied into some of the best secular trends on earth," such as autos and smartphones, he said.
Cramer is not without any concerns on GlobalFoundries, among them that the U.A.E.'s Mubadala Investment still owns around 90% of the company.
"The U.A.E. is a very close U.S. ally. The problem is we're talking about a publicly traded entity that's still basically run by ... what's a private equity fund. Suboptimal," he said, while again stressing the historic challenges associated with operating semiconductor foundries.
"The whole group gets eviscerated every time there's a bad downcycle. So you have to really believe we've got tremendous long-term demand for chips if you're going own this one," he said.
GlobalFoundries, which priced its IPO at $47 per share, closed its debut session Thursday slightly in the red. However, the stock gained 5% Friday to close at $48.74.
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