One Hot New IPO and One For My Wish List

by Hilary Kramer | November 4, 2013 12:45 pm

It’s been great talking about IPOs over the past few weeks, and I wanted to take this week to wrap up the series talking about two companies–one that just started trading, and one that I would love to see go public down the road. These two are in very different sectors, but both look promising, and I thought it would be fun to share why I like them.

The Container Store (TCS[1]) is more than just plastic containers; it’s an entire storage and organization system retailer. The stock just started trading last week, and with the IPO priced at $18 a share, it opened at nearly double [2]that price. Investors are excited because comparable store sales have risen for 13 straight quarters. Total sales climbed to $706.8 million last year from $568.8 million three years ago.

The Container Store also has plenty of growth opportunities through online and call centers, which have increased 84% over the past three fiscal years and account for 5.4% of total business.

It trades under the symbol TCS, and is one I would definitely keep on my radar. As we talked about earlier in this series on IPOs, one strategy I’ve often used is to let the excitement die down a bit and buy on dips. This could be an excellent candidate for that kind of strategy.

One on My Wish List

While cloud computing has been around for a few years now, it is still changing the way we share, and how we keep tabs on data–from e-mails to video to pictures. One company I would be very interested in should it decide to go public is Dropbox. This company helps you store and share files among several computers and different users, and its “freemium” model (with basic storage services tiering up to larger, and more expensive, storage plans) has garnered more than 175 million users in just four years.

The company was valued at $4 billion a few years ago when it tapped the private markets for $250 million, and by buying Mailbox earlier this year, management is expanding their user base to iOS users, and offers an easy-to-use mobile-device media player and photo viewer.

Dropbox does compete with larger cloud storage players like Apple (AAPL[3]) and Google (GOOG[4]), but there’s still plenty of room to grow. A 2012 study by Forrester Research showed that only 14% of adults online use backup or storage offerings, and Dropbox is the most popular.

The company has also been sticking to its knitting by focusing on developers as its core audience. Dropbox helps you backup your information across several devices and platforms. For example, from a Microsoft (MSFT[5]) Windows PC at the office, to your Android smartphone you use every day. With strong innovation, and a focus on the cloud, where growth is virtually limitless, Dropbox looks to be a strong buy when it comes to market and for the long term as well.

Unfortunately, Dropbox won’t be coming to market anytime soon, but it’s a company that has the power to profit should it decide to go public.

I hope you’ve enjoyed talking about IPOs as much as I have. As I’ve said, they are red-hot right now. With all different companies making headlines, I thought it would be helpful to take a step back and dissect some of the big names, as well as names that could make a good investment and others that might not. Many IPOs are too risky, but there are diamonds in the rough, and finding those can be very profitable

  1. TCS:
  2. opened at nearly double :
  3. AAPL:
  4. GOOG:
  5. MSFT:

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