If you’re looking for new stocks to watch in 2023 for potential breakout opportunities, the most logical options would be new initial public offerings (IPOs).
According to Renaissance Capital, there have been 36 IPOs year-to-date. They have raised $2.4 billion in proceeds through April 15. StockAnalysis.com says there have been 53, more than 39% less than a year earlier.
Either way, it’s not nearly as easy to find new stocks to watch as in 2021, when 397 IPOs raised more than $142 billion.
The slowdown in 2023 is due to higher interest rates. In addition, companies thinking of going public have faced challenges getting bank financing. The collapse of Silicon Valley Bank didn’t help startups that banked with it. They had to find a new lender.
Nonetheless, the task is to find new stocks, so that I will do. I’ll try to come up with one name from each of the year’s first three months. That might not be possible, given the lack of IPOs in 2023, but I’ll certainly try.
Skyward Specialty Insurance Group (SKWD)
Skyward Specialty Insurance Group (NASDAQ:SKWD) is a growing specialty insurance company providing property and casualty solutions in the U.S. It focuses on markets that are underserved or in some way not currently meeting the insurance needs of businesses.
The company was founded in 2007. It sold a large piece of its business in 2014 to Westaim Corp. (OTCMKTS:WEDXF), a Canadian investment firm.
Skyward went public on January 12, selling 8.95 million shares of its stock to investors at $15. In addition, insiders sold 4.2 million shares in the IPO. The company got zero proceeds from those sales. However, it did generate $71.3 million in gross proceeds from the sale of 4.75 million additional shares.
In the nine months ended Sept. 30, 2022, Skyward had revenues of $455.6 million, 13% higher than a year earlier. Its adjusted operating income was $46.9 million, 64.6% higher than in the first nine months of 2021.
SKWD is up 41.2% since its IPO.
Nextracker (NXT)
Nextracker (NASDAQ:NXT) provides smart solar trackers and software solutions for the solar energy industry. As of Sept. 30, 2022, it had shipped 70 gigawatts (GW) of its solar tracker systems for solar energy projects worth more than $67 billion. In addition, it had $2.1 billion of firm orders as of Dec. 31, 2022.
The company went public on Feb. 8, 2023, selling 30.6 million shares at $24 each, generating net proceeds of $693.8 million. The net proceeds were used to buy 30.6 million LLC common units from its parent, Flex (NASDAQ:FLEX). Flex owned 60.9% of Nextracker after the IPO was completed.
At the beginning of April, I selected Nextracker as one of three IPOs to watch out for. Founded in 2013, I continue to like its business. It is the global leader in solar trackers — if you’re not familiar with them, they help ground-mounted solar panels follow the sun — and has been since 2015. It has more than 200 customers in over 30 countries.
Its revenues in the nine months ended Sept. 30, 2022, was $870.4 million, 28.0% higher than a year earlier. Its operating income was $69.2 million, 68.0% higher than in the first nine months of 2021.
Its stock is up 45.2% since its IPO.
Atlas Energy Solutions (AESI)
Atlas Energy Solutions (NYSE:AESI) provides proppant and proppant logistics to oil and gas producers in the Permian Basin in West Texas and New Mexico. Proppant is sand combined with fracturing liquid during the hydraulic fracturing process to help the oil or natural gas flow more easily from the reservoir to the well.
Atlas priced its IPO on March 8. It sold 18 million shares of its stock at $18 each. The underwriters could buy an additional 2.7 million shares within 30 days of the IPO closing.
The company grew considerably in 2022. Its sales were $408.5 million, 180% higher than a year ago, while its operating income was $232.0 million, nearly 5x higher than in 2021 and considerably better than its $1.2 million loss in 2020.
Founded by CEO Ben Brigham and other experienced oil and gas operators in 2017, it provides operators in the Permian Basin with just-in-time proppant logistics, helping their customers remain efficient and profitable.
Of the 10 analysts that cover its stock, eight rate it as a “Buy,” while two others rate it as “Overweight,” with an average target price of $24.30.
Atlas stock is flat from its IPO price.
On the date of publication, Will Ashworth 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.
