Scouting the Latest IPOs

Just like opening day at the ballpark, investing in new IPOs holds the potential for shining promise and crushing disappointment. If you simply can't bear to just cheer on your favorites from the sidelines, at least be careful about investing in this league. Many new issues swing for the fences during their first trading days, only to slump once the marketing hype has given way to mundane earnings reports.

Don't commit an error by stocking your entire portfolio with rookies. Allocate just a small percentage of your risk capital to IPOs. Scout your potential phenoms carefully, and be choosy about composing your own rotisserie league. Investing with an eye for a season extending long beyond opening day will reward you with quality players capable of staying in the game. With that in mind, we offer our Foolish scouting report of the latest IPOs.

Last week's games

• Veraz Networks
• Ticker: Nasdaq: VRAZ
• Industry: Softswitches provider
• Deal terms: 9 million shares, $8 per share
• Lead managers: Credit Suisse and Lehman
• Filed: Oct. 20
• Opening day: April 5, opened flat, closed at $7.80, 2.5% loss
• Bleacher banter: Priced below its proposed range of $10-$12 per share

On deck

• Comverge
• Proposed ticker: Nasdaq: COMV
• Industry: Clean energy solutions provider
• Proposed deal terms: 4.7 million shares, $15-$17
• Lead manager: Citigroup
• Filed: Oct. 5

Game of the week
Other than MBF Healthcare Acquisition, a blank-check company, Comverge is the only game in town this week.

The New Jersey-based company, formed in 1997 as a wholly owned subsidiary of Acorn Factor, provides clean energy solutions which improve electrical grid reliability and increase capacity. Comverge's software and products do this through demand-management solutions which don't produce harmful emissions and are 40% less expensive when compared with the costs of building and operating a new natural-gas power plant.

Customers include more than 500 electric utilities, including 65% of the largest ones in North America. The company recorded $33.9 million of revenues in 2006, compared with $23.4 million in 2005, but has incurred net losses since inception. In 2006, the net loss narrowed to $6.2 million from $8 million the prior year, while the accumulated deficit from inception through year-end 2006 totaled $52.2 million.

Given the size of the electric utility market, which raked in estimated sales of $275 billion in 2005, and the company's competitive strengths, Comverge is an intriguing play in the growing clean energy sector. Shares are expected to begin trading Friday. As always, make sure you do your own warm-ups and read through a company's offering documents, including the risk factors, before getting in on the game!

Warming up in the bullpen

• CardioMEMS, a biotech, announced deal terms of 6 million shares at $12-$14 per share. The lead manager is Banc of America.
  
  
• Interactive Brokers, an electronic broker, announced deal terms of 20 million shares at $23-$27 per share. The lead manager is W.R. Hambrecht.
  
  
• MetroPCS, a cell-phone service provider, announced deal terms of 50 million shares at $19-$21 per share. The lead manager is Bear Stearns.
  
  
• Simcere Pharmaceutical, a Chinese pharmaceutical company, announced deal terms of 15.6 million American depositary shares at $12.50-$14.50 per share. The lead manager is Goldman Sachs.
  
  
• Superior Offshore International, an oil and gas services provider, announced deal terms of 8.7 million shares at $14-$16 per share. The lead managers are Merrill Lynch and J.P. Morgan.

Sent down to the minors
No planned offerings scheduled for last week were postponed.

Minor-league developments
Get ready, get set ... not yet! The latest filings announced during the past week include:

• Acorn International
• Proposed ticker: NYSE: ATV
• Industry: Chinese marketing company
• Proposed deal terms: Not yet determined
• Lead managers: Merrill Lynch and Deutsche Bank
• Filed: April 5
  

• BladeLogic
• Proposed ticker: Nasdaq: BLOG
• Industry: Data-center software provider
• Proposed deal terms: Not yet determined
• Lead managers: Morgan Stanley and Merrill Lynch
• Filed: April 5
  

• ComScore
• Proposed ticker: Nasdaq: SCOR
• Industry: Digital marketing intelligence provider
• Proposed deal terms: Not yet determined
• Lead managers: Credit Suisse and Deutsche Bank
• Filed: April 2
  

• Dice Holdings
• Proposed ticker: NYSE: Not yet determined
• Industry: Career-website provider
• Proposed deal terms: Not yet determined
• Lead managers: Credit Suisse and Morgan Stanley
• Filed: April 5
  

• EDENOR
• Proposed ticker: NYSE: EDN
• Industry: Argentine electricity distributor
• Proposed deal terms: Not yet determined
• Lead managers: Citigroup and J.P. Morgan
• Filed: April 5
  

• PROS Holdings
• Proposed ticker: Nasdaq: PROZ
• Industry: Software provider
• Proposed deal terms: Not yet determined
• Lead managers: J.P. Morgan and Deutsche Bank
• Filed: April 5

Disabled list
No planned offerings were withdrawn last week.

Champions
Meet our current champs. Among companies that went public during the past 12 months, these firms' percentage returns from their offer prices to their most recent closing prices rank them as the top five players.

Benchwarmers
Now meet our current benchwarmers -- that's nicer to say than "losers," isn't it? Among companies that went public during the past 12 months, these firms' percentage returns from their offer prices to their most recent closing prices rank them as the bottom five players.

Groupies and fan clubs
If you don't want to declare your loyalties for specific players but still want to enjoy the action, consider subscribing to an IPO-focused mutual fund or exchange-traded fund. Of course, do your scouting homework here, too, and make sure you read the prospectuses before you buy season tickets.

Equities performed well last week, with the Nasdaq rising 2.1% and the Russell 2000 gaining 1.6%, while the IPO Plus Aftermarket (FUND:IPOSX), a mutual fund, advanced 1.9%, and the First Trust IPOX 100 (AMEX:FPX), an ETF, increased 1.4%.

Keep reading the Fool to see how your favorite players perform as they mature!

We're publicly offering further Foolishness:

• The IPO Lock-Up Period

Sources: Renaissance Capital's IPOhome.com, SEC filings, Reuters.

Omrix Biopharmaceuticals is a Rule Breakers recommendation. New Oriental Education is a Global Gains selection. MasterCard is an Inside Value pick. You can take a peek at these or any of our Foolish investing services free for 30 days.

Fool contributor S.J. Caplan roots for the Cleveland Indians when her husband is watching, and for the Boston Red Sox when he leaves the room. She holds no financial position in any firms or funds mentioned here. The Fool has a disclosure policy.