Saturday, March 25, 2023
Homemad moneyPut Rocket Fuel in your portfolio?

Put Rocket Fuel in your portfolio?

(Click for video linked to a searchable transcript of this Mad Money segment)

If you have a penchant for big moves, you might want to take a closer look at the stock of this company.

The one day swings can make an investor take pause.

The company is Rocket Fuel, and much like the firm's name, gains can be turbocharged.

For example, when the company came public in September shares rallied a whopping 93% on the first day of trading.

But Rocket Fuel isn't simply an IPO story; since that time the stock has also made other breathtaking advances.

Andy Ryan | Stone | Getty Images

For example, "Rocket Fuel preannounced better than expected numbers last week, on the 22nd, and you know what happened? The stock shot up in after-hours trading," noted Jim Cramer.

Of course, big moves in Rocket Fuel haven't been limited to upswings. The stock has also made jaw-dropping moves lower, too.

"The very next day shares of Rocket Fuel got hammered and hammered hard ultimately falling from $66 down to $57," Cramer explained, with investors selling out of so-called momentum stocks during the broader market sell-off.

That's quite a wild ride. And it's due to opposing forces that regularly move this stock.

On the bullish side, Rocket Fuel has big potential. "Using artificial intelligence Rocket Fuel helps businesses make the best programmatic ad buys on the Internet," said Cramer. That could be huge.

However, with a market cap of $2 billion, it's a relatively small company that's viewed as a momentum stock. And, when the broad market turns lower, it's just these kinds of stocks that pros sell first worried that valuation has climbed too far too fast.

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Therefore, if you think the broad market is facing a bumpy road ahead, then it's not unlikely that Rocket Fuel could swing again.

"It feels like we've entered a moment where, when the market's strong, a fast-growing momentum stock like Rocket Fuel can perform terrifically," Cramer mused. "But on down days when the market's weaker, it could get put through the meat-grinder, too."

Now make no mistake, unless you don't have an appetite for risk, this stock is not for you. "However, if you have the constitution for a vomit-inducing rollercoaster ride, it could give you a lot of bang for your buck," said Cramer.

Call Cramer: 1-800-743-CNBC

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