Picking a great stock can be extremely rewarding regardless of whether or not you're first to the party. Titanium Metals, for example, has been a public company since 1996, but investors that 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 have owned Google over the last two years are up just around 24%. However, those investors that boarded the Google train at its 2004 IPO at the opening price of $100 are sitting on a gain of over 380%.
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 new 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 over 5,500 other stocks. The following is a review of some of the most recent IPOs to hit the market:
|
Stock
|
Return Since IPO
|
Total CAPS Ratings
|
CAPS Bulls
|
CAPS Rating
|
|
Colfax (NYSE: CFX )
|
50%
|
211
|
207
|
****
|
|
Energy Recovery (Nasdaq: ERII )
|
27%
|
94
|
93
|
*****
|
|
Safe Bulkers
|
0%
|
28
|
24
|
**
|
|
Western Gas Partners (NYSE: WES )
|
(3%)
|
50
|
50
|
*****
|
|
China Distance Education
|
(5%)
|
0
|
0
|
NA
|
Source: IPOHome, Yahoo! Finance, and CAPS as of July 30.
Note that these are not a list of recommendations. Instead, I highly recommend that you visit CAPS and check out what CAPS members are saying about these offerings. In the meantime, here are a few thoughts about Colfax:
Colfax goin' with the flow
The market has been without a lot of things lately, and IPOs are certainly one of them. Though Visa (NYSE: V ) made serious waves with its massive offering and the stock surge that followed, and a few others like Intrepid Potash (NYSE: IPI ) have found their way to the spotlight due to great returns, overall the IPO market has been pretty much dead.
The dearth of IPOs shouldn't be all that surprising, though. When a company goes public it typically wants two things above all. First, it wants its earnings to be as high as possible -- preferably growing fast and at a high point for the company. And second, it wants the investing public to be excited about buying IPO shares. Right now you're going to find few private companies that fall into either camp -- let alone both.
But there are oases in this IPO desert and Colfax is a great example. The company makes fluid handling products for the commercial marine, oil and gas, power generation, global navy, and general industrial markets. In 2007, Colfax's revenue was up 29% and net income exploded from $94,000 to $65 million.
So what's so great about Colfax? For starters, between commercial marine -- think container ships and tankers carrying oil -- and direct sales into the oil and gas market, the company has been benefitting from the booming energy market. Colfax also makes 66% of its sales outside of the U.S. and has been benefitting from global growth trends such as new power generation projects, navy fleet expansions, and general infrastructure build-out in developing countries.
Of course, as the 50% run since its IPO shows, investors haven't missed the opportunity at Colfax, and the stock isn't exactly cheap anymore. On CAPS, though, members have been pretty darn positive on the stock. CAPS member blurose7 put his thumb up on the stock shortly after it IPOed in May and noted that the stocks of two of Colfax's already public competitors -- Robbins & Myers (NYSE: RBN ) and Flowserve (NYSE: FLS ) -- have had huge runs. He thought that a good environment for the oil and gas market would lead to great returns from Colfax.
Have some thoughts of your own? Head over to CAPS and let the community know what you think about these IPOs. While you're there, you can check out some of the thoughts that over 110,000 CAPS members have had on the 5,500-plus stocks currently rated.
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