3 New Issues IPO Investors Need to Know About for This Week

This week's trio of fresh issues includes a pipe maker, a chemical manufacturer ... and a crazy chicken.

Jul 20, 2014 at 12:00PM

Another week, another five days full of IPOs. In other words, welcome to 2014. So far, this year is on track to be one of the best on record for new stock issues; according to IPO specialist Renaissance Capital, over 150 IPOs have been priced, with $32 billion in proceeds raised from issues coming to market.

The latter number is nearly 50% higher than at the same time in 2013 -- which, by the way, was the year that recorded the highest number of new issues and total proceeds since 2000.

That makes it tempting to hot-foot it to your brokerage's website, select an upcoming issue, and place a big order, doesn't it? Well, not so fast: We need to warn that 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 provides great upside potential, but conversely, it also carries the risk of losing a substantial part of an investment.

OK, you've gotten our usual tsk-tsk. Now for this week's three picks.

El Pollo Loco Holdings
"The Crazy Chicken," a drive-through fast-food chain specializing in its namesake poultry and a variety of Tex-Mex items, has a big flock in Southern California. It's got a smaller presence in four other Western states, and as of the end of March, it had a network of 401 restaurants. Roughly 42% of these are company-operated, while the remainder are franchised. The Chicken has strong regional brand awareness going for it as well as rising revenue, although it's struggled to turn a bottom-line profit in recent years.

Just over 7.1 million shares of El Pollo Loco will fly to the market on Friday, priced at $13 to $15 per share. They are to be listed on the Nasdaq, bearing the ticker symbol LOCO (of course). The lead underwriters of the flotation are Leucadia's (NYSE:LUK) Jefferies, Morgan Stanley (NYSE:MS), and Baird.

Advanced Drainage Systems
It might not have the sexiest company name in the world, but Advanced Drainage Systems' moniker is wonderfully self-descriptive -- the company does good business selling heavy-duty pipe and related materials, including storm and septic chambers.  The firm has done a good job of increasing its revenue over the past few years, and it lands consistently in the black, although that profitability tends to lurch up and down quite a bit. 

Advanced Drainage Systems' IPO will take place on Friday, and 14.5 million shares will be sold for $17 to $19 apiece, trading on the New York Stock Exchange under the ticker symbol WMS. The issue's lead underwriters are Barclays (NYSE:BCS) and Deutsche Bank (NYSE:DB) Securities.

Orion Engineered Carbons
This Germany-based chemical producer specializes in carbon black, a versatile petroleum by-product used as a coloring agent and filler for a wide variety of goods. There's a lot of use for the stuff, as evidenced by the company's most recent annual revenue figure of $1.3 billion euros ($1.8 billion). Orion and its predecessor firm have posted net losses over the past several years; at least some of this is due to weakness on their home market of Europe. Perhaps with a U.S. listing and a stronger presence here, it can turn those bottom-line figures the color of its signature product.

Friday will be the day Orion Engineered Carbons makes its debut on the market, specifically the NYSE, and 18 million shares will be sold for $21 to $24 per share. The issue will be lead-underwritten by Morgan Stanley, Goldman Sachs (NYSE:GS), and UBS Investment Bank. The stock's ticker symbol is to be OEC.

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Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Apple, Goldman Sachs, Google (A and C shares), Leucadia, and Netflix and owns shares of Apple, Google (A and C shares), Leucadia, and Netflix. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.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.

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