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Cramer: SPACs Can Hatch Opportunities Like Stem, SoFi

Jim Cramer details which SPACs have lost and which have already completed their mergers and now have solid growth and earnings.

Investing in so-called “blank check companies” can be risky, but in a recent Mad Money segment, TheStreet’s Jim Cramer looked at how some Special Purpose Acquisition Companies, or SPACs, have grown into strong investment opportunities. 

SPACs are formed to raise capital through an initial public offering in order to buy an existing private company, then merging with that company. 

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A SPAC acts as a checkbook and does not engage in its own commercial activity. SPACs have become popular recently both with investors and companies seeking to go public, but they come with their own brand of risk.

“Earlier this year several SPACs collapsed under their own weight," Cramer said. "Many deals turned out to be just promises, while others couldn't live up to the hype. There is one group of SPACs that's begun making a comeback, however: The SPACs that have already completed their mergers and now have solid growth and earnings,” Cramer said, describing how four companies that completed the process have since taken off.

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Cramer is a big fan of California-based energy storage provider Stem  (STEM) .

“Our electric grid is a wreck and companies are scrambling to become more eco-friendly. It's no wonder Stem reported revenue up 200%,” Cramer said.

Cramer also describes BeautyHealth SKIN as a worthy investment. “This purveyor of non-invasive skin treatments has sold over 17,000 delivery systems to spas around the globe and now has a lucrative business selling consumables.”

Cramer likes SoFi  (SOFI) - Get SOFI TECHNOLOGIES INC Report, the online lender that's now becoming a full-fledged bank. Shares bottomed in mid-May, but recent weakness gives investors another chance to buy in, Cramer said.

Finally, Cramer said investors looking to invest in cannabis should skip the growers and look into WM Technologies  (MAPS) - Get WM TECHNOLOGY, INC. Report, which provides technology solutions for the cannabis industry.