IPO stocks offer big-league appeal for speculators. But not all companies see instant success or gains out of the gate. Some stumble, suffering multi-month downtrends before a sustainable bottom is found. Today we’re looking at three IPO stocks from 2019 that did just that and are now attractive stocks to buy.
Some newly minted companies go on to become the Apple’s (NASDAQ:AAPL) and Amazon’s (NASDAQ:AMZN) of the world, generating massive wealth for investors brave enough to buy in the early innings, and patient enough to leave the shares untouched so they can grow. IPOs provide the public with their first crack at investing in previously private and otherwise unreachable companies.
Today’s tempting picks all suffered heavily last year, but are finally looking up. Technical signs have arisen, suggesting it’s finally worth bottom fishing.
Let’s take a closer look.
IPO Stocks to Buy: Uber (UBER)
Uber (NYSE:UBER) was one of the most highly anticipated IPOs of the decade. But anticipation doesn’t automatically translate into quick profits once the shares become available. UBER stock drifted in a volatile range for two months after its debut. Then sellers swarmed and cut the stock in half.
With November’s post-earnings plunge, we saw capitulation. The massive volume drop washed out weak hands and set the stage for a sustainable recovery. Several broken resistance levels later and we have a beautiful three-month uptrend that has recouped much of the ground lost during last year’s descent.
The turn of the New Year brought fresh buyers, and UBER stock is already up 25% for 2020. If you’ve been watching for signs that Uber has turned a corner, the wait is finally over.
Implied volatility is juiced ahead of its Feb. 6 earnings announcement, making naked puts an attractive play.
The Trade: Sell the Feb $35 puts for $1.05.
Zoom Video Communications (ZM)
The only stock in today’s gallery that saw a taste of success after its IPO is Zoom Video Communications (NYSE:ZM). But sadly, the gains unraveled over the back half of 2019, warning would-be buyers off.
Fast forward to today, though, and I can find multiple signals that suggest bull trades are worth a shot. December’s descent held the $61 support zone, resulting in a potential double-bottom pattern. Bulls emerged in a big way this month, propelling ZM stock to four-month highs. We’re now trending higher above a rising 20-day and 50-day moving average, and accumulation days are multiplying.
Throw it all together, and ZM is now worth buying. I like bull puts to increase the odds of success.
The Trade: Sell the Feb $70/$65 bull put spread for 80 cents.
Slack Technologies (WORK)
Slack Technologies (NASDAQ:WORK) has been an unmitigated disaster since its June 2019 IPO. Within five months it lost half its value. The sad thing is buyers didn’t even put up a fight. I can’t find a single resistance break in the entire downtrend.
Until this year, that is.
Momentum finally slowed in the fourth quarter with WORK stock flashing some much-needed stability. The sideways pause allowed the shares to build a potential base to launch an uptrend from. Unfortunately, the early January strength is fading, with WORK slipping back below the 50-day moving average as I type.
The lack of upside followthrough suggests we may need more time until a sustainable rebound takes root. But you can use naked puts and covered calls to get paid while you wait if you’re willing to bottom fish here.
The Trade: If WORK breaks above today’s high ($22.29), then sell the Feb $20 put for 40 cents.
As of this writing, Tyler Craig didn’t hold a position in any of the aforementioned securities. For a free trial to the best trading community on the planet and Tyler’s current home, click here!
