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IPO Insight: 3 Newly Public Stocks to Add to Your Q2 Buy List


  • GlobalFoundries (GFS): The ongoing global chip shortage suggests strong growth prospects for the chipmaker.
  • Rivian Automotive (RIVN): This EV manufacturer saw its stock decline over 60% so far in 2022, offering a great entry point for buy-and-hold investors. 
  • SentinelOne (S): A cybersecurity company targeting 80% top-line growth for fiscal 2023 thanks to soaring recurring revenue.
upcoming IPOs

Source: Shutterstock

2021 saw the number of initial public offerings (IPOs) jump to the highest levels since the late 1990s. According to research by Ernst and Young, a record 2,388 new stocks around the globe raised $453 billion while going public in 2021. Those two metrics represent year-over-year (YOY) increases of 64% and 67%, respectively. Over 1,000 companies went public in the U.S. through traditional IPOs or special purpose acquisition companies (SPACs), raising roughly $316 billion and smashing the previous annual record by over 50%.

However, dismal returns from these IPOs have so far disappointed investors in these new stocks. Amid expectations for higher interest rates and geopolitical turmoil, the market has rotated away from IPOs that seem risky.

Meanwhile, the Renaissance IPO ETF (NYSEARCA:IPO) is currently down 36% year-to-date (YTD), compared with 10% and 17% for the S&P 500 and Nasdaq 100, respectively.

With that information, here are three new stocks that promise lucrative returns for long-term investors:

GFS Globalfoundries $50.74
RIVN Rivian $33.61
S SentinelOne $32.68

GlobalFoundries (GFS)

semiconductor stocks Close-up electronic circuit board. technology style concept. representing semiconductor stocks

Source: Shutterstock

Our first IPO stock is GlobalFoundries (NASDAQ:GFS), the fourth-largest foundry worldwide. The chipmaker focuses on “specialty” or trailing nodes used in automobiles, communications devices, and to support the Internet of Things (IoT).

The chipmaker, which became public in October 2021, released fourth-quarter 2021 results on Feb. 8. Revenue jumped 74% YOY to a record $1.85 billion. Adjusted net income was at $98 million, or 18 cents per diluted share, compared to an adjusted net loss of $524 million in the prior-year quarter. Cash and equivalents ended the period at $2.9 billion.

Management announced it received $3.2 billion in prepayments from customers to build additional production capacity. In addition, GlobalFoundries announced a strategic partnership with Ford (NYSE:F) in November to boost chip supply.

Despite the strong results, investors have been worried about geopolitical tensions and lockdowns in China. They could, after all, lead to further global chip shortages for the foreseeable future.

GFS stock has declined 22% YTD. Shares are trading at 31 times forward earnings and 4 times trailing sales. Meanwhile, the 12-month median price forecast for GlobalFoundries stock stands at $80.

Rivian Automotive (RIVN)

rivn stock sign outside the company's HQ in Silicon Valley

Source: Michael Vi / Shutterstock

Our next new stock is Rivian Automotive (NASDAQ:RIVN), which designs and manufactures electric vehicles (EVs). The company, which went public in November 2021, is among Time Magazine’s 100 most influential companies for 2022.

Rivian reported Q4 2021 results on Mar. 10. Revenue was $54 million. Adjusted net loss widened to $1.24 billion, or $2.43 per diluted share, compared to $355 million a year ago. Cash and equivalents ended the period at over $18 billion.

The EV maker has more than 83,000 net preorders for its electric truck, the R1T, alone. Rivian also boasts an initial order of 100,000 Electric Delivery Vans (EDVs) from Amazon.com (NASDAQ:AMZN) after the e-commerce giant became a large stakeholder in the company.

However, supply chain constraints are also affecting the EV group. Management announced it had to scale short-term production plans back to only 25,000 EVs in 2022, down from 50,000 EVs.

Like many other growth names, RIVN stock has fallen in 2022, down 68% YTD. Despite the significant decline, shares are likely to stay volatile in the short run. Meanwhile, the 12-month median price forecast for Rivian stock is at $81.

SentinelOne (S)

An image of the word cybersecurity overlaid over a pixelated background, images of locks and shields and virus icons surrounding it

Source: BeeBright / Shutterstock

Our final IPO stock is the cybersecurity names SentinelOne (NYSE:S). Its Singularity XDR Platform delivers an artificial intelligence (AI)-powered threat prevention and response capabilities for clients. The company went public in June 2021.

SentinelOne announced Q4 and FY22 results on March 15. Revenue soared 120% YOY to $65.6 million. Adjusted net loss came in at $44 million, or 17 cents per diluted share, up from $31.8 million in the prior-year quarter. Cash and equivalents ended the period at $1.67 billion.

Investors were pleased that annualized recurring revenue (ARR) grew 123% YOY to $292 million. Large customers that spend $100,000 or more on the platform also went up by 137% YOY to 520.

In March, SentinelOne announced the acquisition of identity security company Attivo Networks for $617 million. Wall Street highlights that the move significantly expands the group’s total addressable market. Management now forecasts revenue to increase by about 80% in fiscal 2023. 

Despite the positive developments, S stock is down 35% YTD. Shares are trading at 31 times trailing sales,. Finally, the 12-month median price forecast for SentinelOne stock stands at $49.

On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

Article printed from InvestorPlace Media, https://investorplace.com/2022/04/ipos-insight-3-new-stocks-to-add-to-your-q2-buy-list/.

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