The blessed, they are so few. That’s how I feel when I look at the crop of initial public offerings (IPOs) since 2020, a cornucopia of huge winners at the start of the decade, including Alex Karp’s Palantir, followed by a mighty fallow crop to the present. Trying furiously to catch up after a whirlwind week of Super Bowl and birthday parties, I am struck by how few phenomenal companies have bothered to come public in an era when doing an IPO has gone out of fashion. Maybe it’s too difficult — too much scrutiny, onerous regulatory concerns as well as plenty of capital from another tier that seems comfortable staying private right along with management rather than pressing them for a “liquid event.” Let’s not forget the hundreds of companies, mostly special purpose acquisition companies (SPACs), that should have never come public to begin — and with that, soured the public to new merchandise. Those, plus the endless Chinese dross, truly burned investors. Deals became too difficult to sell, and nothing seems to have changed since Donald Trump won the presidential election even as I thought the IPO market would be more receptive by now. I have only seen a few Chinese stragglers of late, nothing to write home about. And, speaking of the Chinese market, yes, I believe President Xi Jinping needs his market higher so badly that he is willing to allow the capitalist class to come back to life. As usual may I suggest you stick with Alibaba because it has U.S. financials, and it’s very cheap on any standard you chose. The souring on IPOs, though doesn’t mean there aren’t a few winners. I thought it might be worth considering some of the real standouts during this period because they seem to have unusual staying power and aren’t talked about enough as a class. Some of these companies have stocks that just won’t quit. They are impressive and may be worth buying on any rare swoon, if not outright, at the moment. APP 1Y mountain Applovin 1 year Let’s start with Applovin , one of the greatest companies that has come through the chute in ages. I know a lot of people feel that it’s overvalued because it really is a company that matches advertisers with users in a mostly video game setting, a seemingly not-so-special task. It doesn’t matter. The quarter it just reported was a monster. It pretty much owns the market and, periodically, I hear of competitors but they just don’t have any game. Until they do, I don’t see a lot of new competition on the horizon with any heft. For the old hands out there, Applovin is DoubleClick on steroids. I know we joke about it endlessly at the office because how could such a silly-named company really have any strong business, let alone a rocket ship of a stock. But the earnings before interest, taxes, depreciation and amortization (EBITDA) that we saw last week was massive. Is it possible that they truly can be that profitable when an outfit like TradeDesk, in a similar subset just let people down? Absolutely. Applovin is one of those companies like Club name Nvidia , which always seems expensive and turns out to be very cheap in hindsight when we see the forward numbers. Right now, it sells at 79 times forward earnings. It might turn out to be 30 or 35 times when the results are in. That’s what kind of business it has — and will keep having — unless a company like Google, owned by Club holding like Alphabet , the most likely competitor, gets involved. Like many of these companies, Applovin is a darling of retail investors, a committed lot that isn’t going to desert this one any time soon. PLTR 1Y mountain Palantir 1 year Second, there’s Palantir . It’s the most asked about stock I get these days — not Nvidia. I’ve been on board this one since the $30s, and I’ve been going nuts for it since $50. I am not losing my ardor. This company, so shrouded in mystery, is a huge favorite of the new administration for its successful work on Warp Speed that helped bring Covid vaccines to market during Trump’s first White House term. I heard the irrepressible CEO Alex Karp, brag about the company’s own work on its Covid fighting efforts, and that’s enough to brand it a Trump stock, because no one has bothered to contradict him. Who would risk doing so? I do not know. Palantir is an enterprise software company, which means that the market doesn’t care about earnings. It cares about revenue growth and profit markets and Palantir’s combination of the two is extraordinary, hence the inability of this stock to be stopped by mortal short sellers. I may like Palantir the company, but I hate the way Palantir, the stock, moves because it is so reminiscent of GameStop. Any time a seller surfaces, it’s like a wayward soldier sticking his head up, which is ill-advised. The public has seized on this one like no other in this market and it continues to be rewarded at every turn. It’s tougher to make a case up here unless something happens to enlarge its business overnight. But a hypothetical here: what if Palantir fan Elon Musk were to say that DOGE is bringing in Palantir to help restructure the Pentagon making it more lethal and less expensive? Palantir is quite vocal about how President Dwight D. Eisenhower’s farewell address warning about the military-industrial complex has come to pass, that the endless combinations of contractors has ended any real competition. After what we have seen happen in the battlefields of Ukraine, where inexpensive drones seem to be able to stop anything mechanized, maybe Palantir can reform the Pentagon. Seems impossible, then again, the Pentagon has never run into the likes of Alex Karp. It’s something that I have thought about endlessly for my Charitable Trust , the portfolio of 33 stocks we use for the CNBC Investing Club. But I wanted to have more than a ten second pullback, and we just haven’t had one. HOOD 1Y mountain Robinhood 1 year Third, how can you not be impressed with the grown up version of Robinhood ? Just a few short years ago, it looked like these guys wouldn’t make it. Now, it is the dominant next-generation online broker, meaning the next generation that is about to take their Baby Boomer inheritances and do some serious investing. From the looks of their business book, there is still too much non-serious investing, lots of buying of any kind of any crypto and all sorts of options. For a very long time, I thought the make-up of its trading book would doom this company. But, like the old Timex commercial, its customers “take a lickin’ and keep on tickin’.” The last few quarters have been extraordinary. Like many of these companies, the price-to-earnings (PE) ratio always seems too high — again, until it’s not. What’s strange about the strength of this company is that the other brokers treat their account base as if they are some sort of deplorable portion of the investing public. They should be embracing this cohort and developing similar products to Robinhood — really challenge these guys. After looking at that last quarter, though, it might be too late to catch them. Robinhood’s lead now seems that great. CEO Vlad Tenev: 1, everybody else, 0. ABNB 1Y mountain Airbnb 1 year Fourth, I do not know why people have stayed so negative on Airbnb until that last quarter. In truth, I have liked every one of it quarters and have said so repeatedly on “Mad Money.” But it’s been all for naught until the company’s last three months. CEO Brian Chesky is a humble, self-deprecating soul, one who can be his worst enemy because he is so critical of himself. The fact is, he long ago won this category. In an era when all we want to do is bet on travel and leisure, from the cruise ships, to the hotels, to the bookings agents, why have we shied away from something we all use? Beats me — but after that last quarter, it doesn’t matter. I don’t see this company or its stock falling appreciably in its future. Buyers will rush in next time this one drops, which means it probably won’t do so. Like Tenev, and some others here, Chesky won us over with the best, easiest to work with app, and things will never be the same, because he has the scale and the traffic and the DNA to defeat all comers. DASH 1Y mountain DoorDash 1 year Five, when I first met Tony Xu, the CEO and co-founder of DoorDash , I didn’t even think he had a business, let along a profitable one. Delivering food? So many competitors; so hard to find help; and with a pandemic that was causing restaurants to drop like flies — it seemed like a suicide mission. I was wrong. So were many short sellers. As I can tell you from the days we ran Bar San Miguel in Brooklyn, you couldn’t stop these guys. They wooed you, and they demanded your business with their aggressive tactics. And, when the pandemic was really pounding your establishment, they cut prices. What a godsend. It made the difference for so many of us, and we were won over. When DoorDash decided to deliver more than just restaurant takeout, you knew they had a nationwide hit. Normally, I would be skeptical of a company that would so quickly buy an outfit in Europe as this company three years ago, usually a sign that business has run its course in America. Not with Xu. Can’t doubt him. He’s a very successful consolidator. I know there are competitors, still. I am aware there is periodic turbulence. But all those rocky periods? They are buying opportunities to take down more DoorDash. UBER 1Y mountain Uber 1 year I am going to have to take a little license with the sixth company because it came public in 2019, not 2020, but I can’t leave it out because there is still some doubt about how it will fare in the long-term and the doubters are wrong. This company is Uber — and the franchise, like so many others here, is unassailable. I couldn’t believe the opprobrium with which the last quarter was greeted, and I said so to CEO Dara Khosrowshahi when he came on “Squawk on the Street” to announce his most recent quarter. Like many companies mentioned here, their stocks often act incorrectly when they report their numbers. Sometimes, I think it’s because they don’t have a strong institutional base. Initially, the stock would go down on margins not expanding enough. Then, it was nascent competition. Now, it’s self-driving. It’s ridiculous how people continue to shadowbox with this one. Uber won the category a long time ago, and it will find a way to win if we have self-driving cars, which are still a long way off because of atavistic institutions that have a human bias, even as autonomous electric vehicles have a much better safety record. Watching Uber trade after it reported its quarter two weeks ago, it is obvious that this one is prone to any chest-puffing by Mr. Musk at Tesla, so you might as well wait until the next alleged death knell utterance. Like many of these companies, the sellers tend to be people who would not know how to live without their Uber app that just gets better and better with each iteration. RDDT 1Y mountain Reddit 1 year Look, I know that Reddit , our seventh stock, didn’t have a loved quarter. But it was a tremendous quarter. It’s just that the company’s stock has had a Palantir-like run by Redditors who got too excited while the professionals didn’t know what all of the excitement was about. This stock, like Palantir, has an enthusiastic shareholder base — but unlike Alex Karp, who openly courts the masses, Reddit CEO Steve Huffman quietly goes about his job, and he does it very, very well. It’s a natural to think that the Wall Street Bets folk would walk up the stock of their site, their home, but I think that there was no way the company could ever live up to that spectacular run. So, what do you now? I think it’s pretty easy. You wait for it to get seasoned right here, perhaps let it be more overwhelmed by profit taking and then you go side-by-side with the Redditors. I can’t say invest in it because at this pace you are going to get hurt if real sellers, institutional holders, come out of the woodwork. This one is so hard for me because I have such faith in the Redditor buyers even as I would say this one is the most overvalued on this list. You can’t use “faith in the buyers to be there” as a rational reason to own a stock. The buyers are irrational — but as long as they stay solvent, you will make money with this one. CAVA 1Y mountain Cava 1 year How much can you make in the next Chipotle ? It doesn’t matter, just go buy it. That’s the attitude of the people who buy the stock of Cava because they are clearly not price sensitive. They just want to own the next winner and who am I to tell the investors in this delicious Mediterranean-inspired restaurant chain, my eighth pick, that they are wrong? Ever since it came public, I have been saying that Cava is the right restaurant chain for the moment because it’s offering a healthy alternative at a decent price. It’s a healthier Chipotle, with a similar price point. Now, it is hard for me to get behind a 250 times earnings stock even if it might be the next Chipotle. That PE multiple for Cava is simply too high. Normally, when you get such a high ratio, you just have to say pass. But there has been so much money made in Chipotle; you can’t argue with the concept of buying the concept early. It’s as rational as the stock price is irrational. But there’s no large selling to speak of and when it does have a swoon you can almost see the Cava patrons ordering shares along with their Mediterranean fare. They aren’t going to stop as the company’s management opens stores all over the country. It’s almost become a stock like Palantir and Applovin where I feel like saying: “I don’t care about valuation anymore just go buy it.” I can’t do it. But, in the end, who am I in the face of satisfied customers of both the restaurant and the stock. SNOW 1Y mountain Snowflake 1 year I can’t believe that, number nine, Snowflake got its groove back. The data warehousing and analytics mining company seemed like a cooked goose when Frank Slootman left the CEO suite a few years ago. The outsized Slootman could will customers to try Snowflake, and the customers seemed to like it. We used to describe Snowflake as a company that allowed its customers to rent the cloud to see if they like it. But now, I am beginning to think people who are baffled by generative artificial intelligence rent Snowflake to decide if AI can help them with their data and when they do, they stay with Snowflake. Renters become owners. The cerebral Sridhar Ramaswamy, had the misfortune to follow in the huge CEO footsteps of the Bill Belichick-like Slootman. Took a bit, but now Ramaswamy is really starting to pull it off. I think the selling argument is so easily accomplished that the turn is for real. The customers actually need Snowflake’s help. The selling proposition is indeed that good. The product does wonders for theirs businesses, which, in turn, works wonders for the stock. SOFI 1Y mountain Sofi 1 year Finally, tenth, there’s the totally controversial Sofi , which shouldn’t be controversial at all. Two years ago, when this one looked to be staring down the barrel of a short-seller’s howitzer, Anthony Noto, the implacable CEO, came on “Mad Money,” and I pressed and pressed and pressed about any weak spots. I had every short-seller arguments right in front of me, something akin to a half dozen reasons why this company shouldn’t even exist. He hit each fast ball right out of the park. The shorts, led by some wayward sell-side analysts, didn’t realize that Noto is turning this into one of the sainted fintechs out there, like a Block (formerly Square) or a PayPal or an Affirm . Half of the business doesn’t have any risk to it — and if it did, it would still be a lot less risky that Upstart , which has been a huge beneficiary of a monster short position and a lower loan loss ratio than expected. There was a time when Sofi seemed to be a business about refinancing student loans at a time when a president, Joe Biden , was forgiving them at regular intervals. Now, it is an adviser and a low-risk lender that has developed a tremendous following among young people who aren’t really sought after by the big banks. I think this one is in its infancy — and as long as Noto stays there, you have a winner. There, 10 companies with 10 up stocks — some of which I can get behind and others I can’t. But so what? They just keep winning. Sometimes, like at this moment, that’s enough. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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Alex Karp, co-founder and CEO of Palantir, arrives for a U.S. Senate bipartisan Artificial Intelligence Insight Forum at the U.S. Capitol in Washington, D.C., on Sept. 13, 2023.
Stefani Reynolds | Afp | Getty Images
The blessed, they are so few. That’s how I feel when I look at the crop of initial public offerings (IPOs) since 2020, a cornucopia of huge winners at the start of the decade, including Alex Karp’s Palantir, followed by a mighty fallow crop to the present.
