Enough has already been said about the IPO market fiasco in 2015. It perhaps makes better sense now to look at the companies that took the IPO route in 2015, did quite well and have bright prospects in 2016. In fact, these brand new stocks can bring you a fortune in 2016.
It is not that easy to find such stocks when the favorites are stumbling. Predicted to be the heroes of the IPO market, Box and Square went public at drastically deep discounts — 30% and 40%, respectively, on their last private valuation. How can still there be a good offering?
Nevertheless, there’s always a winner and not many days go by without a stock in the entire universe that is in the green.
5 Recent IPOs to Bet On
We have shortlisted five such stocks with excellent growth potential. These stocks have a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) as well as long-term earnings growth estimate of more than 20%.
Fitbit FIT
Fitbit raised $732 million, priced higher than initial expectations, which indicates strong demand. The largest seller of fitness-tracking wristbands in the value category operates in an attractive market segment. It also makes decent profits and has a viable growth plan.
The only cloud on the horizon is Apple AAPL with too many loyalists jumping to use its Watch. Android products have been around for a while, but are now growing in number and make. Overall, the market is getting highly competitive, which is probably why these shares are slightly down at around 0.17% YTD.
Sporting a Zacks Rank #2, this company has long-term earnings growth estimate of 28.98%.
GoDaddy GDDY
The provider of domain names and other services for SMBs was better known for the controversial ads, until it raised a cool $460 million. Now, investors are more focused on its recurring revenues and cash flows.
That's not all.
Through international expansion (it’s reportedly targeting China, Japan, Singapore and Korea), product development and more effective ads, the company has been able to establish itself as a serious player. No wonder that its shares have soared almost 65% YTD making it one of the success stories of 2015.
This Zacks Rank #2 stock has long-term earnings growth estimate of 21%.
Collegium Pharmaceutical Inc. COLL
The U.S.-based pharmaceutical company develops and commercializes prescription and over-the-counter treatments for central nervous system, respiratory, and skin-related disorders.
Collegium Pharmaceutical started its journey with $12 per share on May 7. Its shares are currently trading at over $25, representing a year-to-date surge of about 134%.
In most recent news, the company filed an S-1 form with the SEC on Dec 21 for a secondary offering, though details regarding when and how many shares will be offered are unknown. The value of the offering, per the company’s filling, is more than $86.25 million.
Collegium currently has a Zacks Rank #3 and long-term earnings growth estimate of 20%.
Seres Therapeutics, Inc. MCRB
The Cambridge, MA-based company offers a microbiome therapeutics platform. It focuses on developing ecobiotic microbiome therapeutics that treat dysbiosis in the colonic microbiome.
Seres started at $18 per share with its IPO on Jun 26. Its price has now increased to $34.
Seres currently carries a Zacks Rank #3, though it could change if its new trial in ulcerative colitis performs well in the coming months. It has a Long-Term Growth Estimate of 50.52%.
Shake Shack SHAK
The burger and frozen custard expert has done quite well since its IPO on Jan 30. Shake Shack is currently trading at over $39 per share, a significant jump from $21 as on Jan 30.
Sporting a Zacks Rank #1, this company has long-term earnings growth estimate of 27.50%.
Bottom Line
It’s time to forget the weak 2015 IPO market, and move on.
You can't flee from a market like this. So march ahead and scoop up strong stocks with excellent growth potential.
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