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A Post-IPO Rally for Ruckus Wireless

It looks like its offering got caught in a bad market but is rebounding


When Ruckus Wireless (NYSE:RKUS) came public in mid-November, investors were not interested. The shares plunged 18.3% on its first day of trading.

But it actually turned out to be a huge opportunity. Since the public offering, RKUS has surged about 84%.

Hospital Stocks Set for Good, Not Great, 2013
Hospital Stocks Set for Good, Not Great, 2013

So why the big miss? Keep in mind that the IPO market can get easily fidgety, especially when the general market is in a tailspin. And this was the case when Ruckus pulled off its IPO. At the time, the markets were falling in the wake of the Presidential election.

But for investors with a long-term view, it was certainly worth taking the time to read Ruckus’ S-1. You would have noticed that the company — which is a top gear maker for Wi-Fi installations — had a strong track record of growth. For the first nine months of 2012, revenues nearly doubled to $152.5 million, and earnings went from breakeven to a profit of $7.4 million.

The S-1 also had a great section called “Industry Background.” In it, Ruckus pointed out that devices running on Apple‘s (NASDAQ:AAPL) iOS 6 and Google‘s (NASDAQ:GOOG) Android were driving hyper growth in Wi-Fi. It also mentioned a study from Infonetics Research, which had a forecast showing the market going from $296 million in 2011 to $2.8 billion in 2016. That’s a sizzling 57% compound annual growth rate.

Still, going forward investors may want to temper things their sentiment. Consider that Lazard (NYSE:LAZ) analyst Ryan Hutchinson has a price target on the stock of $23. Ruckus is currently trading at $22.50.

But the main lesson here is that whenever the general market swoons, that may be an opportunity to pick up a hot IPO at a cheap valuation.

Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media,

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