Alibaba IPO could be huge for investors - Cramer's Mad Money Stock Picks Recap

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NEW YORK ( TheStreet) -- The markets are starting to get weird now that the Alibaba initial public offering is getting close, Jim Cramer said on Mad Money Monday. Most of the market is doing fine but the fast-growing, high-multiple stocks are getting clobbered, he said.
Cramer explained that Alibaba is a magnet for hedge fund and mutual fund managers because the company is growing like a weed. But with only a limited supply of money available, these fund managers need to sell their slower-growing stocks in order to make room for Alibaba.

Cramer's Mad Money Daily Recap - Friday, 9/5/14

Friday, Cramer said that the upcoming IPO of Alibaba could be huge for investors. A Chinese combination of Amazon.com (AMZN) and eBay (EBAY), it is already larger than both companies combined and growing like a weed with 50% gross margins. The IPO, the largest ever, will be a boon for Yahoo!, which has a large stake in the company.

Bullish
Apple (AAPL) (discussed)
BioDelivery Sciences (BDSI) (Lightning Round)
Chipotle Mexican Grill (CMG) (featured)
Darden Restaurants (DRI) (discussed)
Deckers Outdoor (DECK) (discussed)
Ensco International (ESV) (Lightning Round)
Freeport-McMoRan (FCX) (Lightning Round)
Hain Celestial Group (HAIN) (featured)
HCA Holdings (HCA) (featured)
Kroger (KR) (discussed)
Palo Alto Networks (PANW) (discussed)
Parsley Energy (PE) (Lightning Round)
Restoration Hardware (RH) (discussed)
Take-Two Interactive (TTWO) (Lightning Round)
VipShop (VIPS) (featured)
WhiteWave Foods (WWAV) (featured)
Yahoo! (YHOO) (discussed)

Bearish
Activision Blizzard (ATVI) (Lightning Round)
Lululemon Athletica (LULU) (discussed)
Tekmira Pharmaceuticals (ATVI) (Lightning Round)

That means stocks like Amazon.com (AMZN) , Celgene (CELG) and Tesla (TSLA) will continue seeing rampant selling because these names are fast growers, although not as fast as Alibaba.

The Alibaba deal is already being touted as "oversold," which is Wall Street-speak for shares that are in limited supply. That means many funds will only get a fraction of the shares they want on the deal and will have to purchase the rest in the open market.

Cramer said using Facebook (FB) , a stock he owns for his charitable trust, Action Alerts PLUS, as a comparison, funds should be willing to pay up to $100 a share for Alibaba.

For those who cannot get in on the IPO, and most of us won't, Cramer said Yahoo! (YHOO) remains a great way to profit from the deal. Yahoo! is selling 120 million shares of its stake in Alibaba to raise $6 billion in cash. Cramer said the company is likely to use that money for a big acquisition or two to help it continue to grow.

Take Angie's Off Cramer's List

With shares of online review Web site Angie's List (ANGI) falling over 50% so far this year, is it time for value investors to jump in? Cramer thinks not.

Angie's List is suffering from intense competition, Cramer explained. While its business model is flailing, the company is now running at a serious cash flow deficit. What's the problem? Cramer said Angie's List has a membership model, selling subscriptions to its ratings and reviews while other sites, like Yelp (YELP) , give their information away for free and sell advertising instead.

That's why Angie's List has only managed to round up 2.3 million subscribers and why it spends 83% of its revenues on sales and marketing efforts to replenish them. Cramer called the subscription model "extremely limiting."

But Cramer said he would not be surprised if Angie's List becomes a takeover target given its ailing stock price. He said any number of companies could swoop in, change the company's business model to rival Yelp, and become a substantial player in that space. He suggested Angie's List could also hone in on specific industries such as home improvement contractors and attract a broader audience as well.

But Cramer said he never recommends a company on takeover speculation alone when the fundamentals are bad, which is why he's taking a pass on Angie's List -- the company, in its current form, is just too risky.

NEW YORK ( TheStreet) -- The markets may be feeling some pain next week, Jim Cramer said on Mad Money Friday as he laid out his game plan. Cramer said that with the Federal Reserve meeting on Wednesday and the Alibaba initial public offering on Friday, there could be a lot of money moving out of stocks.
Cramer said on Monday he'll be watching both Apple (AAPL) , a stock he owns for his charitable trust, Action Alerts PLUS, to hear the latest iPhone 6 preorder sales. He'll also be keeping an be on Yahoo! (YHOO) , as that company will be the biggest benefactor of the Alibaba IPO on Friday.


Tuesday brings earnings from Adobe Systems (ADBE) , and Cramer said the stock's reaction will provide a gauge on the health of the tech sector.

On Wednesday, all eyes will be on the Fed, Cramer said. The U.S. and world economies aren't strong enough to handle rapidly rising interest rates, he said, but that won't stop the bond market from overreacting to any news that comes out of the Fed's statement. Investors need to respect the bond market because it can have a big impact on stocks.

Also on Wednesday is FedEx (FDX) , which will provide an excellent read on the health of the global economy.

Then on Thursday it's Rite-Aid (RAD) and ConAgra (CAG) , two stocks Cramer said he'll be listening to for more information.

Finally, on Friday it's the big Alibaba IPO, the largest in history. Cramer said fund managers need to do a lot of selling in order to make room for this huge IPO, so expect weakness all week. If investors can get in on the deal Cramer suggested doing so, although its already been reported that the deal is oversubscribed.

Visteon Is a Winner

There's a business that you've probably never heard of that's worth a lot more than the sum of its parts, Cramer told viewers, and that company is the auto parts conglomerate Visteon (VC - Get Report) .

Cramer said earlier this week that shares of Visteon ran to all-time highs on the news that its management may be considering a plan to split the company into two. But even with shares at these inflated levels, Cramer said Visteon deserves to see its shares trade even higher as the breakup plan would unlock a ton of value.

Visteon's management already has a long history of aggressively rewarding shareholders with big acquisitions and divestitures, Cramer said, so splitting itself is a real possibility. Currently, the company encompasses an electronics company and a climate control company, both of which are very exciting.

Cramer said Visteon's electronics business is benefiting from the boom in infotainment and driver information systems being added to vehicles. All cars are getting more electronics and Visteon has the scale to grow.

Then there's climate control, also in demand as hybrid and electric cars need battery cooling systems and hybrids also need new technology to manage climate when the engines are turned off to conserve fuel.

Just how much are these parts worth separately? Cramer said Visteon's climate control unit could fetch $95 a share while its electronics division is worth another $45 a share. Add the company's acquisition of Johnson Controls for another $17 a share and back out its debt of $25 a share and you get $132 a share, or 23% higher than where the stock trades today.

Time to Buy Whole Foods?

It might be time to start kicking the tires again with Whole Foods Market (WFM - Get Report) , Cramer told viewers, as a turnaround may be coming at long last.

Cramer said it's clear that earlier this year the momentum shifted from Whole Foods to rivals like Kroger (KR) . While shares of Whole Foods have fallen 34% in 2014, shares of Kroger are up 31% to 52-week highs. Yet, even with these diverging share prices, Kroger still trades at just 14 times earnings while Whole Foods trades at 22 times.

Can Whole Foods get its mojo back? Cramer thinks it can, especially with the company's new Affinity loyalty program and its affiliation with ApplePay coming soon. Given that Whole Foods trades on its same-store sales, Cramer said he expects the company to see at least some gains in this metric from these programs and increased advertising spending.


Cramer said shares of Whole Foods could still fall more from current levels, but he'd start nibbling on any weakness.

In his "No Huddle Offense" segment, Cramer said Ulta Salon (ULTA - Get Report) is back after the company reported a near-perfect quarter that sent shares soaring 18% in today's session.

Cramer said Ulta had it all this quarter, from a 9.6% rise in same-store sales to an omni-channel approach that seems impervious to Amazon.com (AMZN) to an upcoming analyst day in October.

After peaking at $130 a share in late 2013, Ulta shares were pummeled to below $80 after its now-infamous December conference call where analyst expectations were seriously reset to the downside. But since then the company has been under-promising and over-delivering and Cramer said analysts will be clamoring to upgrade the stock come October.