The 2007 IPO market is setting itself up to be just as hot as the 2006 one. And Cramer loves talking about IPOs because he knows you can make money if you get in on the right ones. Some of his 2006 faves were Under Armour ( UA), Chipotle Mexican Grill ( CMG) and J. Crew ( JCG). He also recommends taking advantage of IPOs' so-called lockup expiration period to time your buys. Thus, the more you understand IPOs, the more "mad money" you can make. The average return of the 197 companies that went public in 2006 was a whopping 23%, according to Renaissance Capital. The S&P 500 was up only 13.6%. Even better, 71% of those IPOs were actually profitable. Only 26% of the companies that went public during 1999's tech boom made any money. So that's all good news. The bad news is it's still really hard to get IPO shares. But there are ways, and Booyah Breakdown is going to help you figure out how to best take advantage of these offerings.
Private companies generally decide to go public because they need more money, whether it's for working capital, acquisitions or paying debt. So bankers are hired, attorneys are brought in, and a registration statement is filed with the Securities and Exchange Commission. Then the bankers hit the streets and try to promote the stock to potential investors. This traveling PR party has been dubbed the "road show."