A slew of companies will make their initial public offerings this week and here's how Cramer would play them:
General Motors (GM): This IPO is getting the most chatter on Wall Street, but Cramer thinks it's "massively oversubscribed" and will be "almost impossible" for retail investor to get in. The best way to play the GM IPO is through Ford Motor , which could see shares skyrocket should it trade up to the valuations people are talking about for GM.
BitAuto Holdings (BITA): The largest provider of Web-based content for China's automobile industry, BitAuto lists new and used car prices from dealerships across the People's Republic. In turn, the dealers pay to have their vehicles listed on the site. BITA's selling 10.6 million shares at anywhere between $10 to $12 with Citigroup and UBS as the lead underwriters.
Cramer recommends buying BitAuto because the Chinese auto market is "on fire," growing at a 24-percent compound annual rate thanks to increased urbanization and a burgeoning middle class. BitAuto's subscription service for new auto dealerships is growing with subscribers up 183 percent from 2007 and used auto listing subscribers up 312 percent from the first half of 2009. Overall, BitAuto has 90 percent more unique visitors to its site than its closest competitor.
Caesars Entertainment (CZR): Caesars is the world's largest casino company, but Cramer would stay away from this IPO. He doesn't like that it's a deal backed by private equity. John Paulson, the hedge-fund manager known for betting against housing, has the option to sell his $710.3 million worth of stock in the deal. If he's selling, Cramer wonders why he should buy. Plus, Cramer thinks it's kind of expensive, as it's expected to price between $15 and $17. Lastly, he doesn't like that Caesars dominates in Atlantic City, but lacks Asian exposure. He would rather go with Las Vegas Sands or Wynn Resorts for their exposure to Macau.
LPL Investment Holdings (LPL): Cramer would avoid this financial firm, which offers financial advisors a technology, brokerage and clearing platform. Another private-equity deal with a lot of debt, Cramer said LPL is not receiving any proceeds from the IPO. Instead, everything is going to the shareholders who are selling, mostly executives. With the expected price range of $27 to $30, LPL would be valued at 38 times earnings. What's worse, Cramer said, is that its senior secured credit facilities restrict the company from paying dividends.
Aeroflex Holdings (APX): This microelectronics maker hasn't turned a profit since 2007, Cramer said. Don't go near this IPO.
Zogenix (ZGNX): Cramer said this is a unprofitable drug company, which he would steer clear of.
Anacor (ANAC): This drug company doesn't have any products on the market right now and, therefore, isn't generating any profits. Cramer would not invest in this name.
Booz Allen & Hamilton (BAH): This management and technology consulting firm is owned by Carlye Group, but the firm isn't selling any shares. The company does 98 percent of its business with the US government. Cramer is concerned that the government will cut spending, putting BAH at risk. Plus, it has a crippled balance sheet and is expected to come public at a price well above where its competitors are trading.
Correction: A previous version of this story misstated the number of properties owned by Ceasars Entertainment.
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