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Jim Cramer Recommends Buying Albertsons IPO Below $25

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Jim Cramer Recommends Buying Albertsons IPO Below $25

National grocery chain Albertsons is potentially days away from returning to the public market, and investors should buy the stock if the price is right, according to CNBC's Jim Cramer.

What Happened: Albertsons was taken private in 2006, but is making a return to the New York Stock Exchange. A group of shareholders are offering nearly 66 million shares at an $18 to $20 price range.

Investors should take advantage of the stock at "no more" than $24 to $25 a share, as the grocer is "not best of breed, but it's not garbage either," Cramer said Wednesday on "Mad Money."

Albertsons is led by Vivek Sankaran, who took over the CEO title in March 2019. Since then, the "smart" CEO has spent billions to renovate stores and build out a worthy omnichannel business, and added delivery options at most stores, the CNBC host said. 

Sankaran delivered results last year, including more than 3% sales growth in 2019 and a "big improvement" in same-store sales growth, at 2%, Cramer said. 

Why It's Important: Albertsons attempted to return to the public market in 2015 and 2018.

The first time around, its debt stood at a "colossal" $12 billion,  and the latter plans were called off due to poor market conditions, Cramer said. 

Since 2015, the company's debt has improved to a "much more reasonable" level at $8.7 billion given a $2.8-billion EBITDA last year, he said. 

"The Albertsons of today is a much better company than it was in 2018 or 2015." What's Next: Albertsons could see continued strong momentum, as some southern states are seeing growing coronavirus infections, Cramer said.

At the same time, investors should proceed with caution moving forward, as it is possible the "best part of the IPO cycle may have already come and gone," he said. 

Related Links:

A Closer Look At Albertsons Ahead Of The Grocer's IPO

3 Kroger Analysts On Q1 Numbers, Digital Sales, Pandemic Trends

Photo by Famartin via Wikimedia

 

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