Picking a great stock can be extremely rewarding, regardless of whether you're first to the party. Titanium Metals, for example, has been public 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 (NASDAQ:GOOG). Investors who bought the stock this time last year are up a very respectable 29%. But those who boarded the Google train at its 2004 IPO, at the opening price of $100, are sitting on a 370% gain.

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. Last year, while IPOs like Rule Breakers pick Omrix Biopharmaceuticals showed us why it's still great to catch a winner at the open, others, like Vonage, reminded us that you can still lose big.

The Motley Fool's new investing community, CAPS, is helping to make new stocks more transparent by allowing investors to share their thoughts and outlook for recent IPOs (as well as more than 3,800 other stocks). The following are a few of the most recent IPOs.


Return Since IPO

Total CAPS Votes

CAPS Bulls

CAPS Rating





Needs more votes!

Salary.com (NASDAQ:SLRY)




Needs more votes!

Quadra Realty Trust (NYSE:QRR)




Needs more votes!





Needs more votes!

Fortress Investment Group (NYSE:FIG)





Sources: Yahoo! Finance, CAPS.

Meet the newbies
was originally founded in September 2000 as a subsidiary of Hitachi. The company specializes in optical modules and components for high-speed communications, specifically in the market for communications at speeds of 10 gigabits per second (Gbps) and above. It competes with the likes of Agilent spin-off Avago, Bookham, Finisar, and JDS Uniphase in the market for 10Gbps modules and transceivers, which is projected to be $1.2 billion by 2009. The company finished its 2006 fiscal year back in March with $151.7 million in revenue, and has grown revenue at a 38% average annual growth rate since 2003. Though it has historically been unprofitable, it has managed to turn a slight profit for the first nine months of its 2007 fiscal year.

Salary.com is a provider of on-demand software solutions for managing employee compensation packages. The company's main offering, CompAnalyst, brings together Salary.com's proprietary salary databases, third-party data, and customers' in-house data to help customers make compensation decisions. Salary.com has around 1,700 customers, including UPS, Cisco, Merrill Lynch, and Home Depot. It sports a gross margin of around 80%, but expenses that have outpaced revenue growth have kept the bottom line well in the red. For the first nine months of the company's fiscal year, it grew revenue 54%, but the loss from operations more than doubled.

Quadra Realty Trust is hoping to find some success in the commercial real estate market. I say "hoping" because, before the IPO, the company had basically no operations or assets. In conjunction with the IPO, Quadra received a portfolio of loans from the managing company it is working with, Hypo Real Estate Capital (the U.S. subsidiary of Munich-based Hypo Real Estate Holding), in exchange for $141 million of the IPO proceeds and 35% ownership of the outstanding stock. The company's focus will be on providing financing for commercial projects, as well as investing in commercial property.

VeriChip is involved in the area of radio frequency identification, or RFID. The company primarily sells into the health-care market, where its RFID chips and readers are used for tracking people and physical assets. CAPS player darkstar13, who took an early cut at VeriChip, has this to say: "[VeriChip sells] implantable RFID already in use in Hospitals and Nursing Homes. They are also picking up foreign contracts for SAR (Search and Rescue) chips with governments. Just a swing for the fences on a fresh IPO that didn't run like they thought it would."

The company had revenues of $20.3 million for the first nine months of 2006, more than double its revenues for the same period the year before. Gross margins declined slightly over that period, and its loss widened from $2.7 million to $3.5 million.

And, last but certainly not least, Fortress Investment Group is the much-ballyhooed alternative asset manager that trailblazed its way into the public markets. The excitement over the IPO was largely because it allows public-market investors to gain some exposure to the famously cloak-and-dagger world of hedge funds through a well-respected manager with $30 billion in assets. As investors in the company, as opposed to investors in one of its funds, shareholders will take part in the income from performance fees when the funds do well, as well as the ongoing management fees.

The stock is currently trading well above the $18.50 at which the underwriting group priced the IPO, but excitement on the public markets pushed Fortress to $35 per share before it ever started trading. Unlucky investors who bought on the first day are currently sitting more than 20% in the red, which could have something to do with the one-star rating the stock has garnered on CAPS. Though CAPS player PennyStockFJ asserts that Fortress can "turn dirt into gold," FoolforSilver has a less optimistic take:

"[This is a] massively overvalued hedge fund. It's trading at approximately 30 times earnings, which leaves little room for error. The company is paid on a percentage of assets and a percentage of gains. When gains disappear (everyone loses every once in a while), the investors bail, profits dry up, and the stock tanks. There's no track record to justify this price."

Got some thoughts on these IPOs? Head over to CAPS and help them earn their stripes. While you're there, you can check out some of the thoughts that more than 23,000 CAPS members have had on the 3,800 stocks currently rated. CAPS is entirely free -- and it's more fun than watching Terminator 2 and Twins back-to-back (which, as we all know, is a lot of fun).

Get down with some more IPO action:

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. He encourages feedback but asks that you avoid any disparaging remarks about his home state's Governator. UPS is a Motley Fool Income Investor choice. Home Depot is an Inside Value pick. The Fool's disclosure policy has stared T-1000 right in the face and said "hasta la vista, baby."