2007's Hottest IPOs

Picking a great stock can be extremely rewarding regardless of whether you're first to the party. Titanium Metals, for example, has been a public company since 1996, but investors who took the plunge in 2003, when the stock was trading at around $0.50 (split adjusted), are up, well, let's just say a whole lot.

It's a similar story with Google. Investors who bought the stock this time last year are up more than 25%. However, those investors who boarded the Google train at its 2004 IPO opening price of $100 are sitting on a gain of more than 700%.

The allure of buying an IPO has faded a bit since the dot-com era, but there's still that je ne sais quoi about being in on a great stock from the ground floor. Investing in IPOs can be tricky, though, since there's typically less information available about the company and, unless a bank outside the underwriting team decides to cover the stock, there aren't any analyst estimates to work off of.

The Motley Fool's investing community, CAPS, is helping to make new stocks more transparent by allowing investors to share their thoughts and outlooks for recent IPOs, as well as more than 5,000 other stocks. The following is a review of some of 2007's top IPOs:

Stock

Return Since IPO

Total CAPS Ratings

CAPS Bulls

CAPS Rating

JA Solar Holdings (NASDAQ:JASO)

360%

521

471

***

MercadoLibre (NASDAQ:MELI)

338%

272

256

****

Yingli Green Energy (NYSE:YGE)

249%

469

445

****

FCStone Group

191%

168

162

****

VMware (NYSE:VMW)

188%

1,081

960

***

Source: IPOHome, Yahoo! Finance, and CAPS, as of Dec. 28. Returns calculated from IPO offer price.

Before you hop on over to CAPS to find out what CAPS players are saying about these offerings. I have a few thoughts to offer about Yingli Green Energy:

Sunny days for solar
It's not hard to see that it's been the year of the sun on the stock market. With the tailwind of continually climbing oil prices, solar stocks have absolutely smashed the broader market and even made the stock of certain Greek dry bulk shippers (you know who I'm talking about!) look sluggish by comparison. IPOs aside, First Solar (Nasdaq: FSLR  ) skyrocketed more than 800% this year, as did Ascent Solar (Nasdaq: ASTI  ) , and Hoku Scientific jumped nearly 350%. Not to be completely outdone, the more seasoned SunPower and Rule Breakers favorite Suntech Power (NYSE: STP  ) were up 252% and 144%, respectively.

JA Solar and Yingli Green were both obviously on that same party bus, as they tripled and quadrupled investors' money. But what is it that made solar more exciting this year than a date with Scarlett Johansson? Given that some of these stocks are now trading at triple digit earnings multiples, part of the answer is that there is a heck of a lot of speculation going on. The subject of a lot of that speculation is the expectation that solar power will play a significant role in future, cleaner power generation.

On CAPS, Yingli Green has landed itself one of the highest ratings among the solar group. CAPS All-Star AnomaLee calls the stock "one of the most solid solar plays," and highlights the high insider ownership and the company's "vertically integrated manufacturing process." On the broader solar industry, AnomaLee goes on to say, "Wall Street and I both understand that the sun is the greatest source of energy for our planet ... if you think the solar energy sector is hot now, wait until the wealthiest nation in the world really catches on."

Though I'm a fan of solar power myself, it wouldn't surprise me if trying to invest in the publicly held solar companies turns out badly for many investors. In many emerging, cutting-edge industries, excitement has a tendency to outrun the industry's actual near-term prospects -- see the Internet bubble of 2000 for substantiation of this theory. Further, the markets usually see a veritable army of companies chasing hot areas like this. Some of these companies will succeed, but many will end up struggling, if not flat out failing, as competition heats up and new companies with newer, better technology enter the market. So even though the future of solar power may look bright, it's important to be very selective when trying to chase the hot (and hotter) solar stocks out there.

Don't agree with me? Head over to CAPS and share your thoughts on the screaming solar stocks. While you're there, you can check out what the community of more than 79,000 is saying about 5,000-plus other stocks.

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