Because of the Thanksgiving holiday, no IPOs are scheduled for this week. However, there’s a good chance we’ll see some filings, as well as updates on upcoming deals, such as with Zynga.
Instead, let’s take a look at the IPO action for last week.
The good news is that — after a horrendous summer — investors are showing renewed interest in deals. But that interest is selective. The fact is that, for many of last week’s deals, underwriters had to price the offerings at discounted valuations.
Those companies that showed strength, such as Angie’s List (NASDAQ:ANGI), Mattress Firm (NASDAQ:MFRM) and InvenSense (NASDAQ:INVN), have standout growth records. And investors always are looking for ways to juice up their portfolios.
So let’s take a look at these recent IPOs:
Angie’s List: The company has carved out a strong niche as a matchmaker for contractors. Revenues include a blend of advertising and paid memberships (the base is over 1 million).
However, the company has been spending aggressively to attract users and customers. During the first nine months of this year, these costs came to $48 million. This compares to revenues of $62.6 million. So the question investors have to ask themselves is “Can Angie’s List really get to profitability anytime soon?”
Mattress Firm: The mattress retailer has 757 stores across 25 states and has been growing like a dot-com. For the first half of this year, MFRM’s revenues spiked by 41% to $331.8 million and net income was $4.7 million. The company has posted 24 consecutive months of positive comparable-store sales growth.
More importantly, despite its growth, Mattress Firm has plenty of room to stretch its legs. MFRM believes that its market potential in the U.S. is 2,500 stores.
InvenSense: The company develops motion-processing semiconductors, which can sense movement in a three-dimensional space. The company’s marquee customer is Nintendo (PINK:NTDOY), which uses the technology to power the Wii Motion Plus. This system uses “Wiimote” controllers that mimic the use of such things as tennis rackets and golf clubs to interact with games.
For fiscal years 2009 to 2011, InvenSense’s revenues went from $29 million to $96.5 million. INVN also is profitable, with net income of $20.5 million in the first half of 2011.
The key for InvenSense will be to find other applications for its chips, such as tablets, smartphones and Internet televisions. This could prove difficult because of the intense competitive environment, which includes operators like Sony (NYSE:SNE), STMicroelectronics (NYSE:STM) and Freescale Semiconductor (NYSE:FSL).
Tom Taulli runs the InvestorPlace blog “IPOPlaybook,” a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned stocks.