New Stocks on the Block

I don't know if you've noticed, but the IPO market is heating up again. According to new-issue tracker service Renaissance Capital's IPOhome.com, there were more initial public offerings on the American exchanges in 2007 than in any year since the dot-com implosion took the air out of the market in 2001. These days, there always seem to be a few promising tickers on tap.

Here's what's coming up next week, for example:

Proposed Ticker

Pricing Midpoint

Shares (millions)

Expected Market Cap (millions)

CardioNet

BEAT

$23.00

6.6

$150

Pogo Jet

POGO

$14.50

7

$100

Visa

V

$39.50

406

$16,000

This one's for the children
Pogo Jet is a regional on-demand airline that wants to link up the Northeast region with ultra-light three-passenger jets, skipping between smaller airports to avoid the congestion at biggies like JFK or Logan. It's an interesting operating model, but JetBlue (Nasdaq: JBLU  ) and Southwest (NYSE: LUV  ) don't need to fear the upstart quite yet. Pogo has just started to hire its first employees and expects to start flying sometime in 2009.

CardioNet's claim to fame is a mobile cardiac monitoring device that you can wear under your shirt while you go about your everyday business. The tool is meant to replace "loop" monitors, which record your heartbeat on demand. The idea is that loop recorders might not capture abnormal rhythms that just don't occur very often -- a claim that independent studies seem to support.

Backed by Boston Scientific (NYSE: BSX  ) and a melange of private ventures, CardioNet has been operating since 1999 and got FDA approval for its only product six years ago. With the baby boomers inching into their golden years, improved cardiac monitoring could be a hit. But incumbent market leaders such as Northeast Monitoring and GE Healthcare (NYSE: GE  ) surely won't sit on their hands while CardioNet steals their business. Still, keep an eye on this one.

Baby, I believe in you
The white elephant in the room, of course, is credit card colossus Visa. Last fall, Visa restructured itself from a fairly loose collection of regional payment networks into a bona fide corporation, to prepare for this step onto the public markets.

It was just a matter of time before Visa joined recent IPO star MasterCard (NYSE: MA  ) on the NYSE. Discover (NYSE: DFS  ) took the leap last summer, and American Express (NYSE: AXP  ) has been public since forever. OK, since May 18, 1977. Happy now, Poindexter?

The point is that Visa saw a whole lot of money sitting around in other people's pockets, when it could be nestled comfortably in its own coffers. MasterCard raised $2.4 billion in its initial offering, and the stock has been flying high ever since. Discover hasn't fared as well, but it was always a niche player in the credit card market anyhow. At the midpoint of Visa's expected pricing range, the company will rake in more than $16 billion in cold, hard cash. According to the pre-IPO filings, the company has just a little more than $1 billion in cash equivalents today, so it's a major financial upgrade even for a business of Visa's massive scale. In 2007, its networks processed $3.2 trillion in payment transactions, which compares favorably with MasterCard's $1.9 trillion and American Express with its piddly $562 billion volume.

Step by step
Should you get in on any of these deals next week, when they all open for business? The first two tickers may fizzle or pop, but Visa is clearly very hot. But not so fast, Fool.

The average new ticker gained 11% in its first day on the market in 2007 but then got stuck in neutral with an average aftermarket return of 0% from the second day of trading to the end of the year. While there were three doubles and two triples among the 2007 crop of 236 IPOs, there were also 12 stocks that lost more than 50% of their value in aftermarket trading. It's best to tread lightly among the land mines in search of tasty truffles. Let the initial craze settle a bit before you take the leap.

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