by Tom Taulli | December 10, 2013 11:22 am
In a couple of weeks, the IPO market will close for the year — the end of a banner performance for new stocks hitting the market.
There have been 198 IPOs in 2014, and the average gain was about 33.24% — better than the performance of the S&P 500, which is up roughly 27% this year. And the hottest IPOs have been huge ones: The top 5 offerings all returned more than 100%.
Going into 2014, there are few signs that the momentum will slow down, especially as the Dow and Nasdaq continue their winning ways. It also helps that the U.S. economy has been showing more strength lately as we look to close out 2013.
So, what new stocks do investors have to look forward to in 2014? Here’s a look at five prospective new stocks:
Go Daddy filed for an IPO all the way back in 2006, but the deal had to be scratched. However, 2014 might end up being a much better year for Go Daddy to go public. After all, investors have shown a large appetite for cloud-based IPOs, as we’ve seen with offerings from new stocks like Workday (WDAY), Veeva Systems (VEEV) and ServiceNow (NOW).
As for Go Daddy, it is now the largest domain name registrar and web hosting provider. There are more than 12 million customers and an extensive infrastructure, which includes nine main data center facilities that help the company manage its 55 million domains. For the current year, Go Daddy is expected to hit $1.43 billion in revenues.
A few years ago, a group of private equity firms including KKR (KKR), Silver Lake Partners and Technology Crossover Ventures bought Go Daddy for about $2.25 billion. And back in May, a partner from KKR took the reins as the company’s CEO. As seen with standout deals like Dollar General (DG), KKR knows the IPO game quite well, which should give Go Daddy a lot of confidence for becoming one of the hottest new stocks in 2014.
Univision operates a variety of major media assets for Spanish-speaking audiences through television, cable, radio and the Internet. Back in 2007, Univision went private in a deal worth $12.3 billion. The private equity sponsors included Madison Dearborn Partners, Providence Equity Partners, TPG Capital and Thomas H. Lee Partners.
Univision’s business has been running at a nice clip, lately. In the latest quarter, revenues increased by 10.1% to $692.7 million and adjusted operating income rose by 9.2% to $301.8 million. But there are some risk factors for potential investors to consider. One of the company’s top radio hosts, Piolion, recently departed, leaving the company without one of it’s biggest personalities.
But according to a report in Reuters, it looks like Univision could still be adding to the list of new stocks in the second half of 2014.
Twitter (TWTR) likes to tout itself as a “second screen” — a platform that people use to interact while watching television. No doubt, that means huge opportunities to grab advertising dollars. But Twitter isn’t the only one in the second-screen space.
Just look at Shazam. The company’s popular app allows you to identify unfamiliar music or TV shows — and then allows you to purchase that content on Amazon (AMZN) or iTunes, watch related videos on YouTube, or share your encounters on social networks like Twitter and Facebook (FB). Shazam has caught the attention of biggie investors, such as mega billionaire Carlos Slim, who recently shelled out $40 million for a 10.8% stake.
Shazam has more 70 million active monthly users, and with help from Slim, the company is likely to get more exposure in Latin America. Keep in mind that the billionaire owns telecom assets like America Movil (AMX).
Revenues are excepted to double in 2013, reaching more than $600 million. All in all, it should be enough growth to be one of 2014’s hottest new stocks.
TrueCar runs an ecommerce site for autos, and looks to have excellent timing with a 2014 IPO. The auto market has continued to show momentum, as seen with the strength of companies like GM (GM), Ford (F) and AutoNation (AN). In fact, Chrysler is also expected to join the list of new stocks early next year.
TrueCar is the mastermind of serial entrepreneur Scott Painter, who launched other companies like CarsDirect.com, and Zag.com. And he has had little trouble raising capital for his venture, snagging $322 million in venture capital. So investors like GSV Capital (GSVC), the United Services Automobile Association, GRP Partners, Anthem Venture Partners and DealerTrack (TRAK) probably want to get a return on their investments — and soon.
Since 2005, TrueCar has delivered more than 800,000 vehicles to customers, and the company has been profitable since 2009. That makes TrueCar one of the most anticipated new stocks.
Over the past few years, high-fashion operators have pulled off standout IPOs, including new stocks like Michael Kors (KORS) and Vince (VNCE).
And now, it looks like J. Crew Group wants to get in on the action. The company’s legendary CEO, Millard “Mickey” Drexler, is no stranger to dealmaking. When he came on board in 2003, he took the company public. He then launched a going-private transaction in 2011.
For the most part, he has continued to manage things well at J. Crew. One of the most notable customers is Michelle Obama, who has become something of a fashion icon in the U.S.
Drexler has been able to convert the good PR and branding into nice financial results. In the second quarter, revenues increased by 6.4% to $559.1 million, and net operating income came to $55.8 million. The company currently operates 309 retail stores, 112 factory outlets and two clearance locations. That should make J. Crew one of the most fashionable new stocks in 2014.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
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