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 marketing hype gives 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 game
Comverge

• Ticker: Nasdaq: COMV
• Industry: Clean energy solutions provider
• Deal terms: 4.7 million shares, $18 per share
• Lead manager: Citigroup
• Filed: Oct. 5
• Opening day: April 13, opened at $21, closed at $22.31, 6.2% gain
• Bleacher banter: Priced above its proposed range of $15-$17 per share

On deck
MetroPCS Communications

• Proposed ticker: NYSE: PCS
• Industry: Cellular phone service provider
• Proposed deal terms: 50 million shares, $19-$21 per share
• Lead manager: Bear Stearns
• Filed: Jan. 4

Simcere Pharmaceutical

• Proposed ticker: NYSE: SCR
• Industry: Chinese pharmaceutical
• Proposed deal terms: 15.6 million American depositary shares, $12.50-$14.50 per share
• Lead manager: Goldman Sachs
• Filed: March 23

Superior Offshore International

• Proposed ticker: Nasdaq: DEEP
• Industry: Oil and gas services provider
• Proposed deal terms: 8.7 million shares, $14-$16 per share
• Lead manager: Merrill Lynch
• Filed: Aug. 11

Game of the week
With a potential offering of more than $1 billion, MetroPCS dominates the schedule this week.

The Texas-based company launched its wireless broadband personal communications services in 2002. The company provides its services in certain metropolitan U.S. locales, on a flat-rate, unlimited-usage contract without lengthy contractual obligations.

Based on growth in subscribers and revenues, MetroPCS claims that it's the nation's fastest-growing wireless broadband PCS provider. It currently has access to wireless licenses covering a population of 140 million, and as of the end of last year, it had approximately 2.9 million total subscribers, a 53% jump over the prior period. The company recorded $1.3 billion in revenue in 2006, compared to $872 million in 2005, and $53.8 million of net income in 2006, compared to $198.7 million the prior year. The company also carried a heavy debt load of $2.6 billion as of Dec. 31, 2006, with $1.3 billion cash on hand.

MetroPCS's competitive strengths include the underserved market it targets, with flat-rate plans offering unlimited calls to and from service areas. Requiring advance payment also limits Metro PCS's credit exposure. Still, the company faces some headaches, such as a patent-infringement lawsuit by Leap Wireless, current funding shortfalls for planned new markets, and stock-option compliance issues.

Shares are expected to begin trading Thursday. 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 the game!

Warming up in the bullpen

• Cavium Networks, a semiconductor provider, announced deal terms of 6.25 million shares at $10-$12 per share. The lead managers are Morgan Stanley and Lehman.
  
  
• Cinemark Holdings, a movie-theater operator, announced deal terms of 28 million shares at $17-$19 per share. Lead managers include Lehman, Credit Suisse, Merrill Lynch, and Morgan Stanley.
  
  
• EDENOR, an Argentine electricity distributor, announced deal terms of 15.2 million American depositary shares at $16-$18 per share. The lead managers are Citigroup and J.P. Morgan.
  
  
• Ocean Power Technologies, an alternative energy company, announced deal terms of 5 million shares at $20-$22 per share. The lead managers are UBS, Banc of America, and Bear Stearns.
  
  
• Orexigen Therapeutics, a biotech, announced deal terms of 6 million shares at $11-$13 per share. The lead manager is Merrill Lynch.

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 last week include:

Einstein Noah

• Proposed ticker: Nasdaq: BAGL
• Industry: Bagel restaurant operator
• Proposed deal terms: Not yet determined
• Lead managers: Morgan Stanley and Cowen
• Filed: April 10

FBR Capital Markets

• Proposed ticker: Nasdaq: FBCM
• Industry: Financial services REIT subsidiary
• Proposed deal terms: Not yet determined
• Lead manager: Friedman Billings
• Filed: April 10

Ocean Freight

• Proposed ticker: Nasdaq: OCNF
• Industry: Shipping fleet operator
• Proposed deal terms: Not yet determined
• Lead managers: Banc of America and Cantor Fitzgerald
• Filed: April 9

Virtusa

• Proposed ticker: Nasdaq: VRTU
• Industry: Offshore tech services provider
• Proposed deal terms: Not yet determined
• Lead manager: J.P. Morgan
• Filed: April 6

Disabled list
Vanguard Car Rental Group, a car rental services provider, withdrew its planned offering last week, because of its anticipated purchase by Enterprise Rent-A-Car.

Champions
Meet our current champs. Among companies that went public during the last 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 last 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 their prospectuses before buying season tickets.

Equities performed modestly last week, and our watched players ended the week in the same range. Coming in first, the Nasdaq rose 0.8%, while the Russell 2000 gained 0.7%. The two IPO players, the IPO Plus Aftermarket (IPOSX) and the First Trust IPOX 100 (AMEX:FPX), an ETF, tied with increases of 0.6%.

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

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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.