Why Jim Cramer Says Fundamentals Matter in Alibaba IPO

NEW YORK (TheStreet) -- TheStreet's Jim Cramer acknowledges investors are coming with reasons not to buy Alibaba when it hits the New York Stock Exchange on Friday morning.

But Cramer says the stock will not be expensive if it opens at $80 because it would still be cheaper than most other Internet companies he follows, with the exception of Baidu  (BIDU) . He also says not to worry about the convoluted ownership because dozens of media companies have similar structures.

He further says not to worry that the market capitalization is too big because it could exceed Facebook's  (FB) , yet Alibaba would still have a lower price-to-earnings multiple.

Cramer says fundamentals do matter and believes the stock is not too expensive until it climbs north of $100. He thinks the market would poorly receive Alibaba at that price because people will call it a top. Cramer does not want to own the stock at more than $100, but calls it a bargain at $80.

TheStreet Ratings team rates Yahoo!  (YHOO) , which owns a significant stake in Alibaba, as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate YAHOO INC (YHOO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, solid stock price performance, good cash flow from operations, expanding profit margins and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

You can view the full analysis from the report here: YHOO Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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