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Cramer: Wall Street weariness of IPOs good for Life Time

Aspirational fitness brand seeing return to gyms as delta variant of COVID wanes.

Mad Money’s Jim Cramer warned viewers on a recent episode that fitness stocks may not be the best way to muscle up one’s portfolio right now, but there are some gems.

The fitness sector is a crowded one, and Cramer's on record warning investors to avoid stocks like Peloton  (PTON) - Get Peloton Interactive, Inc. Class A Report and to be careful with volatile stocks like F45 Training  (FXLV) - Get F45 Training Holdings Inc. Report. He remains a fan of Planet Fitness  (PLNT) - Get Planet Fitness, Inc. Class A Report.

Wall Street's patience has finally run out for hot, new IPOs, Cramer told viewers, but that's a good thing for new gym stocks, including Life Time Holdings LTH, which came public on Oct. 7 at $18 a share.

Life Time is an aspirational brand that currently operates 150 locations. Their facilities are more resort than gym, Cramer explained, and the company was quick to pivot to digital memberships when the pandemic first hit. But now that the Delta variant is on the decline, members are flooding back to in-person fitness and the company is reemerging as a strong contender.

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Cramer said while Life Time still has a lot of debt on its balance sheet, the company's enterprise multiple is only 14, almost half that of rival Planet Fitness at a multiple of 27. Given that low valuation, and its lackluster debut, Cramer said he'd be a buyer on any continued weakness.

Shares of Life Time have moved lower since the company's IPO. They ended the day Tuesday up 73 cents, or 4.5%, at  $16.98.

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