Initial Public Offers (IPOs) are exciting events for investors as they open up entirely new opportunities. IPOs are often newer companies that have outgrown private capital markets due to the rising popularity of their disruptive products and services. It is inherently risky to invest in companies with a relatively limited business history that are beginning to challenge today’s leaders who have more resources and stronger brands. Nonetheless, growth-stage disruptors can deliver monstrous returns to shareholders as they move up to leading positions in the industry.
Here are three interesting IPO stocks that have recently entered the public market.
Palantir is a powerhouse of data analysis
Palantir (NYSE: PLTR) was founded in 2003 by a group consisting of PayPal‘s (NASDAQ: PYPL) Peter Thiel. Palantir is a leader in data analytics who has become known for his role in counterterrorism and crime prevention. The company quickly acquired an excellent reputation for its selection of talented employees, leading investors and a list of clients including government agencies and leading companies. Palantir’s fame made it one of the most anticipated IPOs in recent years. As early as 2014, the company was valued at $ 15 billion, making it one of the most valuable private technology companies.
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The stock went public in September 2020 via a direct listing instead of a traditional IPO. This means that existing shares were sold on the open market, rather than new shares being created and sold publicly. For individual investors, both are functionally similar events leading to a new stock that can be bought on an exchange. Palantir shares started trading around $ 10, but the stock has since risen above $ 27 per share during a period when the S&P 500 grew less than 10%.
Investors should be aware of the risks associated with buying stocks that have recently tripled in price for a company that has never been profitable. Palantir management is happy to forgo short-term gains to invest in the marketing and business infrastructure needed to continue to grow rapidly, but this obviously requires shareholders to continue to wait for a return of capital. If Palantir continues to win major contracts and take market share in data analytics, which is a major growth sector, the company’s ceiling will certainly be well above its current value of $ 47 billion. This stock is one to keep an eye out for growth investors.
Avantor will benefit from life science catalysts
Avantor (NYSE: AVTR) is a specialty chemicals company serving customers from the biotech, pharmaceutical, medical and advanced materials industries. Founded more than 100 years ago, the company has seen numerous evolutions and changes in ownership, and was completed in its current form following the acquisition of two companies in 2017. Biopharmaceutical, diagnostics and other life science industries are expected to grow as an aging population of the population. developed markets and growing middle class in emerging markets, and Avantor is well positioned to capitalize on those trends as a supplier.
Avantor hit the public markets in May 2019 for $ 14 a share and has since outpaced the market on its way to $ 27. Much of the current buzz is about the company’s role in providing COVID research and development materials. 19 vaccines. Avantor may lack the spectacular benefits available in certain tech stocks with room to scale, but it is currently trading at a modest forward P / E ratio of just 23, despite consensus estimates calling for annual earnings growth of over 20% in the next few years. Avantor should be on your watch list as a recent IPO with reasonable valuation and clear growth drivers.
CrowdStrike is rapidly growing in cybersecurity
CrowdStrike Holdings (NASDAQ: CRWD) gained notoriety for his work in responding to cyber attacks on behalf of Sony and the Democratic National Committee. The cybersecurity industry is gaining in popularity among investors as it becomes an increasingly important part of business and everyday life. Remote working requires data protection, online sales channels need security to function properly and ensure secure transfers of money, and the growing number of connected devices requires technical solutions to ensure privacy. Companies that are leaders in the cybersecurity industry will have very strong growth drivers in the near future.
CrowdStrike’s June 2019 IPO was set at $ 34 by insurers, but the stock traded for $ 63.50 in a market hungry for exposure to cybersecurity leading names. After a short rise, the stock went through seven difficult and volatile months, until it started a rapid appreciation in the second quarter of 2020. On December 10, the stock has surpassed $ 178. Much of this appreciation was due to a bull market that dragged almost all tech names, but CrowdStrike’s revenue growth continued to impress every earnings season.
Like Palantir, CrowdStrike is an unprofitable company with an aggressive valuation. The security company focuses more on growth than on profit. Revenue nearly doubles every year, attracting the attention of growth investors and Wall Street analysts, attracting more buyers to the market and driving prices up. Buyers have to pay for a forward P / E ratio of over 500 and a price-to-sales ratio of over 46, both of which are high, but this is a stock to keep an eye on with a serious long-term benefit term.