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3 Hot IPOs You Might Have Missed

LinkedIn looking too pricey? Try these alternatives


After a long drought, investors are starting to get IPO fever.  Just look at last week’s offering of social networking firm LinkedIn (NYSE:LNKD).  The company priced its shares at $45, and on their first day of trading they quickly spiked to a high of $120. On Monday, they were recently off 6% to $87.50 they are trading at about $87.

LinkedIn has a market value of about $9 billion, which comes to 18 times its projected revenue of $500 million — and the price-to-earnings ratio is more than 500.

But if you think that stock is too pricey – and it certainly seems so – here are a few other high-quality companies that have gone public this year:

Zipcar (NASDAQ:ZIP):  The world’s largest car-sharing service — its 577,000 members use the Web or iPhone to rent cars for short periods of time — is a great concept, especially for urban areas.  After all, it can be extremely expensive to own a car.  But with Zipcar, the savings can reach as much as 70% since there is no need for lease payments, insurance, registration and parking fees.

At the core of Zipcar is its infrastructure.  It processes large amounts of transactions, has map tracking, member management and reservation services. 

And as a sign of its strong brand and customer service, about 28% of new members come from referrals.

In the latest quarter, revenue increased 48% to $49.1 million and the member base spiked 57%.  Zipcar is also moving into foreign markets, such as with its acquisition of Streetcar, which is based in the U.K.

The company’s shares priced at $18 last month, opened trading at $30, and are now trading just under $26.

ServiceSource International (Nasdaq:SREV):  This company develops software that helps technology companies to increase renewals and subscriptions.  It’s a tough problem but ServiceSource has a full suite of applications to help out. 

In fact, the company has a unique pay-for-performance model. Customers only pay a fee if there is an increase in revenue.  It’s something that potential customers have a hard time saying no to.

ServiceSource’s business opportunity is enormous.  Keep in mind that the market size is about $159 billion. 

As for the first quarter, ServiceSource saw a 43% increase in revenue to $46.1 million.  Some of its customers include NetApp (Nasdaq:NTAP), Roche and CA Tech (NYSE:CA).

Service Source priced its IPO shares in March at $10. They began trading at $13.65 and are now trading near $20.

Arcos Dorados (NYSE:ARCO):  This is the largest McDonald’s (NYSE:MCD) franchise operator in Latin America.  The region has been growing at a strong clip and the demographic is fairly young. 

Arcos Dorados has 1,755 locations that have strong market positions in places like Brazil, Argentina, Mexico, Puerto Rico and Venezuela.  It helps that the company has been modernizing its restaurants.  There has also been the launch of new extensions, such as the McCafé.  It focuses on breakfast and after-lunch hours.

In the latest quarter, the revenue increased by 23.2% and comparable sales growth was a healthy 12.5%.  What’s more, adjusted EBITDA was $72.3 million.

Arcos Dorados is a great way to play the emerging markets.  Actually, even if there is an economic slowdown, the company is likely to continue to grow because of its value-priced menu. 

The stock priced its IPO shares at $17 last month and began trading at $21. Since then, the stock has climbed to nearly $22.

Tom Taulli’s latest book is “All About Short Selling” and he has an upcoming book called “All About Commodities.”  You can find him at Twitter account @ttaulli.  He does not own a position in any of the stocks named here.

Article printed from InvestorPlace Media,

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