The market for initial public offerings (IPOs) has been muted in 2016, but things are getting back into gear. Several key drivers are propelling demand for new stocks, such as Wall Street’s search for growth, overall bullishness in equities and continued innovation in the US economy.
And a few IPOs this year have already logged eye-popping gains. Consider that Acacia Communications, Inc. (NASDAQ:ACIA) is up 390% and Twilio Inc (NYSE:TWLO) has returned 278%. So investors haven’t exactly been scared away from new stocks.
This week should be a good one if you’re looking for new stocks to invest in, as there are eight offerings on the calendar, including the biggest name of the bunch: the Valvoline IPO.
New Stocks to Watch: Valvoline (VVV)
Valvoline, which is a premium consumer brand in the lubricant industry, has roots that go back 150 years. Currently, the company has a distribution network of more than 30,000 retail outlets as well as 1,050 Valvoline-branded franchises and company-owned stores. (This retail chain is the second largest in the U.S. for quick lube service.) Valvoline sells its products in about 140 countries.
The financials are solid. In fiscal 2015, revenues came to $2 billion, up from $1.5 billion the year prior. Adjusted EBITDA of $422 million was up from $370 million.
Regarding the Valvoline IPO, the company expects to offer 30 million shares at a range of $20 to $23 under the ticker VVV. Lead underwriters include Bank of America Corp Merrill Lynch (NYSE:BAC), Citigroup Inc (NYSE:C), Morgan Stanley (NYSE:MS), Deutsche Bank AG (USA) (NYSE:DB), Goldman Sachs Group Inc (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM).
New Stocks to Watch: AC Immune (ACIU)
AC Immune is a clinical-stage biotech company that is focused on developing treatments for neurodegenerative diseases associated with protein misfolding, which generally is considered the leading cause of diseases like Alzheimer’s and Parkinson’s.
The pipeline is strong, too. AC Immune currently has seven drug candidates, as well as three diagnostics under development. The lead candidate is crenezumab — an Alzheimer’s treatment made in collaboration with Genentech that is in Phase 3 clinical trials.
Regarding the IPO, AC Immune plans on issuing 4.5 million shares at a range of $11 to $13 under the ticker ACIU.
Lead underwriters include Credit Suisse Group AG (ADR) (NYSE:CS), Jefferies and Leerink Partners.
New Stocks to Watch: E.L.F. Beauty (ELF)
E.L.F. Beauty is a U.S.-based cosmetics company that takes a low-priced approach, with a majority of its items selling at $6 or less. This tends to encourage trial and experimentation. What’s more, the e-commerce and social media platform has also allowed the company to build strong direct consumer relationships, which has bolstered loyalty and has made it easier to adjust to changes in fashion. For example, e.l.f. launches a new product in about 27 weeks on average.
According to the S-1:
“Relative to the overall cosmetics category, our brand over-indexes with Millennials, multi-cultural consumers and some of the heaviest users in the category.”
Last year, revenues came to $191.4 million, up from $144.9 million, and adjusted EBITDA was $46.2 million. Also, E.L.F. beauty is one one of the fastest-growing cosmetics brands at Wal-Mart Stores, Inc. (NYSE:WMT), Target Corporation (NYSE:TGT) and CVS Health Corp (NYSE:CVS).
The company plans to issue 8.3 million shares at a range of $14 to $16 under the ticker ELF. Underwriters include JPMorgan Chase, Morgan Stanley, Piper Jaffray and Wells Fargo & Co (NYSE:WFC).
New Stocks to Watch: CapStar Financial Holdings (CSTR)
CapStar Financial Holdings is a bank holding company that is headquartered in Nashville, Tennessee. CapStar focuses on providing loans to small- and medium-sized businesses in the healthcare industry as well as for real estate transactions. The bank has assets of about $1.3 billion and shareholder’s equity of $114.3 million. The growth strategy is to diversify its revenue base, such as with wealth management and mortgage banking.
CapStar Financial Holdings intends on offering 2.6 million shares at a range of $14.50 to $16.50 under the symbol CSTR. Underwriters include Keefe Bruyette Woods and Sandler O’Neill.
New Stocks to Watch: The Trade Desk (TTD)
The Trade Desk operates a cloud platform that allows companies to buy ads. The system essentially automates 1-to-1 customized interactions in real-time (programmatic advertising).
Growth has been strong. Last year, revenues spiked by 156% to $113.8 million, and the company is even profitable, boasting a $15.9 million profit in 2015.
The Trade Desk plans to issue 4.7 million shares at a range of $14 to $16 under the symbol TTD. Underwriters include Citi, Jefferies and RBC Capital Markets.
New Stocks to Watch: Novan (NOVN)
Novan is a late-stage biotech operator that is focused on dermatology. At the heart of this is nitric oxide, which is critical for a person’s immune response to microbial pathogens and inflammation.
The lead candidate is SB204, which is a gel for acne vulgaris, the most common skin diseas in the U.S. The drug is currently in Phase 3 pivotal clinical trials. This technology actually could help with five dermatological conditions, which would cover some 1.5 billion people.
Novan expects to issue 3.75 million shares at a price range of $11 to $13 under the symbol NOVN. The lead underwriter is Piper Jaffray.
New Stocks to Watch: Apptio (APTI)
Apptio operates a cloud platform for Technology Business Management (TBM). This allows CIOs to use data-driven approaches to better manage technology assets, such as to reduce costs and improve overall performance. Apptio’s system also has lots of scale, with customers that have annual IT spend that range from less than $10 million to billions of dollars.
The company has been on a nice growth ramp. From 2013 to 2015, revenues increased from $73.8 million to $129.3 million. However, the company did produce a hefty $41 million net loss.
Apptio plans to issue 6 million shares at a range of $13 to $15 under the symbol APTI. Lead underwriters include Goldman Sachs, J.P. Morgan, BofA Merrill Lynch, Barclays PLC (ADR) (NYSE:BCS), Jefferies, RBC Capital Markets and Pacific Crest.
New Stocks to Watch: Gridsum Holding (GSUM)
Gridsum develops sophisticated software that performs machine learning and big data analytics to help businesses with online marketing. The company’s database, which processes 61 million internet/mobile daily sessions, is focused on the Chinese market.
Growth has been rapid, with revenues jumping by 89% to $35.3 million last year. But the company has produced ongoing losses, including a $4.5 million deficit in 2015.
Gridsum expects to sell 6.5 million shares at a range of $10.50 to $12.50 under the ticker GSUM. The lead underwriters include Goldman Sachs and Citi.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
