Now this is more like it. After a fairly sleepy two weeks on the IPO scene with only a handful of issues coming to market, between now and Friday, nine new stocks are slated to hit the bourse.
They're fairly concentrated in terms of industry. With the exception of Cheetah Mobile (and Alcentra Capital, an issue I haven't selected for this week's candidates), they're in either the energy sector or the health care sector. This is characteristic of the 2014 IPO market thus far, which has seen a host of these issues.
A word before we get into our three selections for the week: IPO investing carries above-average risk, as initial stock prices can be far from the value the market eventually puts on the company's shares. This situation provides great upside potential, but it also carries the risk of losing a big chunk of an investment.
Thanks for listening. Now, on to our feature presentation.
K2M Group Holdings
This company is a niche of a niche. Operating in the medical-devices segment, its specialty is implements for the spine. According to the company, its technologies are used to treat some of the most challenging procedures involving that vital body part, including scoliosis (curvature of the spine). All told, K2M says, the global spine surgery market stood at $10 billion in 2012 and is anticipated to hit nearly $15 billion in 2019, so the opportunity appears to be there for the taking.
Just over 8.8 million shares of K2M Group Holdings will go on sale this Thursday, at a price of $16 to $18 per share. The issue's lead underwriters are Wells Fargo (NYSE:WFC) Securities, Piper Jaffray, and Barclays. The stock will be listed on the Nasdaq under the ticker symbol KTWO.
China-based Cheetah Mobile makes its coin from the provision of mobile security solutions. The company says its cloud-based data-analytics engines conduct real-time analysis of mobile apps to screen out behavior that might indicate risk to a system and its security. With those analytics, Cheetah Mobile also provides information that helps businesses deliver targeted content to users. These are hot areas, and the company seems to be capitalizing on them: Its top line more than doubled on a year-over-year basis in fiscal 2013, and it's been profitable since 2012.
Twelve million American depositary shares of Cheetah Mobile will hit the market on Thursday, priced at $12.50 to $14.50 apiece. They will trade on the New York Stock Exchange under the ticker symbol CMCM. The underwriting syndicate is being led by Morgan Stanley (NYSE:MS), JPMorgan Chase (NYSE:JPM) unit J.P. Morgan, and Credit Suisse (NYSE:CS).
Thanks to the world's insatiable hunger for almost every type of energy, many companies in the sector are launching master limited partnerships to reap the benefits of such a corporate structure. Subsidiaries of downstream petroleum concern PBF Energy (NYSE:PBF) are floating this MLP, which, in the blunt words of its prospectus, is to "own or lease, operate, develop, and acquire crude oil and refined petroleum products, terminals, pipelines, storage facilities, and similar logistics assets." On an unaudited pro forma basis, the predecessor entity to PBF Logistics took in nearly $51 million in revenue in 2013 while netting a profit of $38 million ($1.20 per unit).
PBF Logistics is being brought to market by an underwriting syndicate headed by Barclays and UBS Investment Bank. Slightly over 13.7 million units will be sold on Friday at a price of $19 to $21 each. The home of the units is to be the NYSE, where they will trade under the ticker symbol PBFX.
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Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo, owns shares of JPMorgan Chase and Wells Fargo, and has options on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.