Cramer: Pros Making a Quick Bundle Doing 'This'

(Click for video linked to a searchable transcript of this Mad Money segment)

Pros have a secret that they don't want you to know about. And it's returning over 20% in a short amount of time.

"I'm seeing pros make a bundle very quickly," Cramer explained. "And it's all from the IPO market."

Take a look at the numbers.

"We had 61 deals in the second quarter, almost double the amount we saw in the first quarter. And, on average, those second quarter IPOs generated a total return of 21%. Those are some phenomenal gains in absolute terms, but the performance of these IPOs looks even better when you compare them to the 2.7% increase in the S&P 500 over the same period. These numbers make one thing very clear to me: IPOs are the way to go."

But that's not to say all IPOs are the way to go, Hardly. Investing in an IPO is akin to swimming in the deep end of the pool - you've got to know what you're doing or you could drown.

"You absolutely have to be selective," Cramer explained.

Lise Gagne | E+ | Getty Images

And the Mad Money host thinks one of the best ways to determine what could do well in the days ahead is to identify what did well in days gone by.

"Looking at the ten best performing deals of 2013, the thing that stands out to me is that they were all growth stocks, mostly small, early-stage growth names," Cramer said.

"And when you look at all 61 deals from the second quarter, the best performing group was the consumer oriented IPOs, up 54% through the end of the quarter. Then there was the 12 technology IPOs, up 33%, followed by the 17 health care deals, up 30%," Cramer said

Because Cramer believes these three areas of the market will continue to attract investor interest, he's identified 6 smaller, early stage growth names that have plans to IPO. All of the following, he thinks, has the potential to follow the patterns outlined above.


Although there are many IPOs coming in this space, Cramer wants you to keep an eye on OncoMed Pharma, which he said has a novel anti-cancer platform and a big early-stage pipeline. Also, he said to check out Envision Healthcare Holdings, the largest ambulance service company in the United States, which should be coming public in the not too distant future.


"A lot of the best performers here were enterprise software companies, many of them cloud based software as a service plays," Cramer said. In this sector Cramer said two companies belong on your radar: RetailMeNot, a digital coupon marketplace and C-vent, a company that which provides on demand software for event planning.


"Here I want you to keep an eye out for the upcoming Neiman Marcus IPO as well as Sprouts, a grocery play," Cramer said.

Read More from Mad Money with Jim Cramer
3 Potential Bargains Under $10
Cramer's Holy Grail
401(k) Plans, The Dirty Secret

"Here's the bottom line," said Cramer. "The IPO market was on fire, and the strongest sectors were tech, healthcare and all things consumer. Going forward, I'd focus attention on forthcoming IPOs in these three groups."

Call Cramer: 1-800-743-CNBC

Questions for Cramer?

Questions, comments, suggestions for the "Mad Money" website?