Cramer's 'Mad Money' Recap: Back to Even

Final Step

Cramer said the final step in analyzing an IPO is to look at the company itself. He said investors need to ask a whole host of questions about what it makes, whether it's profitable and how big its end markets are. Cramer said if the company makes a consumer product, you need to ask whether you like the product.

Cramer said the chances are if the company makes a good product and is already profitable, investors can expect to gain not only from the IPO, but also from the extended run afterwards. He said a trice-blessed IPO would be a profitable entity, with a big addressable market, and a great brokerage sponsoring it.

Cramer said that in all cases, the trick is to recognize the size of the market and the power of its competitors, to determine just how far the new company will likely be able to go.

In the case of athletic apparel maker Under Armour (UA), the company was able to grow like bangbusters initially, but when the company decided to challenge incumbent Nike (NKE) in footwear, Under Armour's sizzle soon fizzled.

Bottom line, Cramer said investors need to do a complete analysis on IPOs by asking a of questions to sift the good from the bad.

-- Written by Scott Rutt in Washington D.C.

To contact the writer of this article, click here: Scott Rutt.

To follow the writer on Twitter, go to http://twitter.com/scottrutt.

To submit a news tip, send an email to: [e-mail].

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

Want more Cramer? Check out Jim's rules and commandments for investing from his latest book by clicking here.

For more of Cramer's insights during the Lightning Round, click here.

>To order reprints of this article, click here: Reprints