Cramer: IPO to Make a Splash
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A handful of IPOs are scheduled in the days ahead, and Cramer thinks in some cases, it's worthwhile to buy strategically.
"I want to clue you in to some companies that might be coming public in the days ahead," said Jim Cramer. "In some cases, I think it may be worth your while to try to get a piece of the action."
SeaWorld
It's likely you're already familiar with SeaWorld, a theme park operator. The company has eleven locations, including three Sea World locations, two Busch Garden locations, three Aquatica locations, as well as Sesame Place, Discovery Cover, and Adventure Island.
"I've liked the theme park plays for some time," said Jim Cramer. "That includes stocks such as Six Flags and Cedar Fair, and I think SeaWorld gives you a new, faster-growing way to play this very strong business."
That is, "SeaWorld has the fastest revenue growth in the space, a 7.2% increase last year, and they have the highest per capita spending at their parks," Cramer said.
Looking at the IPO, SeaWorld plans to sell 20 million shares at a price range of $24 to $27, and at the mid-point of that range, this would be a $2.4 billion company.
At those levels, SeaWorld would be trading with roughly the same valuation as rival Cedar Fair, and it would be selling for about a 13% discount to rival Six Flags.
"I can endorse getting a piece of the SeaWorld deal as long as it doesn't go out above the high-end of the range at $27," Cramer concluded.
Blackhawk
Chances are you don't know Blackhawk, one of the largest third-party distributors of gift cards on earth. Currently it's owned by Safeway.
"Don't misunderstand this company," said Cramer. "Blackhawk doesn't just sell gift cards to Safeway, they also do gift cards for retailers like Amazon, Lowe's, Macy's and Starbucks among others, and they sell prepaid phone cards."
Blackhawk plans to come public between $20 and $22 a share, which would peg the value of this company at $1.1 billion.
"I think Blackhawk has, by far, the best growth metrics in the business, much better than competitor Green Dot," Cramer said. After the spin-off he thinks "Blackhawk will start trading at a multiple that rewards the company for growth."
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But Cramer isn't only enthusiastic about Blackhawk, he's also jazzed about the parent company that remains, Safeway.
"After the spin-off I thinks Safeway should go higher, too," he said. "It's a fabulous way for the grocery store to unlock value."
Fairway
"Fairway is a tiny high-end supermarket chain based in the greater New York metro area with just 12 locations," Cramer said.
Although their food is delicious, Cramer said the deal is hard to swallow. Largely he thinks the company's metrics just won't appeal to the Street.
"At the moment, Fairway is not profitable, it has a lot of debt, and worst of all, for the latest quarter its same store sales are expected to come in just 2.3% higher year over year," he said.
If Fairway wants to appeal to investors, Cramer says it needs to post much better numbers than that.
"Whole Foods, the gold standard here, delivered a 7.2% increase in same store sales in their latest quarter, but that stock has still been getting hammered of late. And if Whole Foods isn't working, I don't see why Fairway should."
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