Investors should wait for Peloton shares to get hit in early 2020 and then 'pounce,' Jim Cramer says

CNBC's Jim Cramer on Wednesday instructed that investors refrain from buying shares of Peloton until the New Year.

The "Mad Money" host is bullish about the connected exercise equipment maker's potential — citing its strong revenue growth in its first quarterly public earnings report — and wants to call it a buy now, but argued the best time to build position in the equity is three months in to 2020.

"In a vacuum, I would recommend Peloton right now. That's how fast it's growing and I like that," he said.

However, Peloton is a fresh IPO in a market "that dislikes them right now," said Cramer, adding that the lockup on insider trading will expire in early 2020.

"When that happens in March — I know that's still a [long] way, but people are going to be thinking about it — I expect the stock to get hit," he said. "Now that is probably when you pounce."

Cramer recently advised against buying fellow 2019 IPO class member Uber for the same reason, warning that the stock would tumble after its insider selling lockup period expired last week. Uber, which debuted on the market in May at $42 per share, set an intraday low of $25.58 after the ban was lifted. Similarly, Beyond Meat's stock plummeted 20% after its lockup expired in late October.

When Peloton IPO'd for $29 in September, the host assessed that the stock was not worth buying until it fell below $23 a share. He was lamented that the company came public at the worse of times as Wall Street was overwhelmed by the number of IPOs this year. Peloton's stock bottomed at $20.56 the following month and ended Wednesday's session under $27.

On top of that, Peloton, which builds exercise bikes affixed with screens for viewing workout classes or entertainment, is a fast-growing company in a market where institutional investors have turned away from businesses that have no earnings, making it "too risky to own here," he continued.

"Even after the stock's 5.2% run today on the news that it's exploring apps for Amazon Fire TV and the Apple Watch, I want to approach this one with some caution," Cramer said.

In the meantime, Cramer is green lighting gym franchise Planet Fitness as the best-of-breed play in the exercise group. The stock had fallen more than 30% by October from its June closing high of $80.90. It has since recovered much of those losses ending Wednesday's session below $71 per share.

"In a market that favors profitable growth, sticking with what's working ... that's Planet Fitness," Cramer said. "The stock never should've been down so much over the summer and even [after] the latest move, it's got more room to run."

Disclosure: Cramer's charitable trust owns shares of Amazon and Apple.

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