10 SPAC stock ideas worth buying on a decline


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CNBC’s Jim Cramer beat up the latest number of companies going public for special purposes through shell companies called SPACs or acquisition companies earlier this month.

Weeks after warning viewers of celebrity-backed SPACs, which he viewed as risky gimmicks, the Mad Money host put out a list of 10 pieces it thought worth buying on Wednesday.

The proposals come after shares of Churchill Capital IV Corp, a Shell company that announced a reverse merger with electric car maker Lucid Motors, fell 50% to $ 28.70 in two sessions. It wasn’t alone how many other speculative SPACs, like Star Peak Energy Transition, also fueled.

“When SPAC stocks are hammered as a group, Wall Street has a tendency to toss the baby out with the bathwater, as we saw earlier this week,” Cramer said. “The next time these higher quality SPACs hit … you must be ready to buy them.”

SPACs, also known as blank check companies, became one of the hottest go-public trends on Wall Street last year during volatile trading as many companies suspended or delayed their initial public offerings. As an alternative to an IPO, a SPAC is a public entity created with the sole aim of raising money in the market, usually starting at $ 10 per share, in the hopes of buying a private company in the future.

In 2020, 200 SPACs raised approximately $ 64 billion. More than 190 traditional IPO deals generated $ 67 billion, the highest since 2014, according to Renaissance Capital.

Alongside growth and tech stocks, SPACs fell out of favor in the market starting last week. Investors adjusted their portfolios to buy reopenings and value games as inflation fears sparked a sell-off in recent trading days.

Cramer said he expected more pain for SPACs.

“I’m not telling you to pull the trigger now, I’m saying you should watch them on the way down because they break,” he said.

All but one stock on Cramer’s SPAC shopping list fell this week, including double-digit declines in Social Capital Hedosophia and Star Peak Energy Transition. Below are his takeaways for each game:

MP Materials: “It’s high quality. It’s managed very well. … I want you to be ready for the next retreat.”

Star Peak Energy Transition Corp: “I think you’ll get an even better buying opportunity once that [deal to buy Stem] closes, but if you can get this for less than $ 30 I’d rush. “

Porch Group: “I think you can start buying Porch here and maybe wait for a bath to buy more.”

Utz Brands: “You don’t get a lot from an entry point, but when it gets closer to $ 20 you have to be ready to pull the trigger on Utz.”

DraftKings: “I have a programming contract with DraftKings … so you can take what I say with one [grain of salt]but this is a real business generating real revenue and growing like weeds. … that is, if you like this, it’s on a thorn, but it might come down. “

Social Capital Hedosophia: “You can buy it here, [but] Leave room [to buy more on] the way down. We are in an unpredictable market. “

Vertiv: “You can take a small position here then hope it comes down” to buy more.

Open Lending: “The stock isn’t cheap, but if Open Lending hits the numbers well this thing will look like a bargain at current levels”.

Skillz: “I think Skillz has a great story … if it drops below $ 30, pull the trigger.”

AppHarvest: “AppHarvest is far from cheap. The stock is down 22% from its highs and currently looks more tempting at $ 33. If it hits the high $ 20, nibble.”

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