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Dave & Buster’s Leads 8 New Stocks This Week

It looks like the recent volatility in the equities markets is having a negative impact on new stocks. Last week, there were 11 offerings and seven either posted break-even or negative returns. Some were actually pretty awful, with Vivint Solar (VSLR) down 14% and Atento (ATTO) off by 15%. (One deal, Viking Therapeutics, was delayed.)

But the weakness may be more than about adverse market conditions. Let’s face it, there has been a flood of new stocks that have hit the markets, with mega deals like Alibaba (BABA), and Citizens Financial Group (CFG). So it is reasonable that there should be some investor fatigue.

Yet Wall Street bankers are still pushing forward, as there are 8 new stocks ready to go public this week. Let’s take a look at each.

New Stocks to Watch: Dave & Buster’s Entertainment (PLAY)

Expected Offering Date: Friday

Dave & Buster’s operates large entertainment venues, which include video games and food services. There are currently 70 locations in 27 states and Canada.

For the 26 weeks ended August 3, 2014, revenues increased by 17% to $376 million and the adjusted EBITDA grew by 19% to $89 million. However, the company has a debt load of $438 million because of a leverage buyout (which was struck in 2010).

Dave & Buster’s Entertainment plans to issue 5.9 million shares at a range of $16 to $18. The lead underwriters include Jefferies, Piper Jaffray, William Blair, Raymond James and Stifel.

New Stocks to Watch: Diplomat Pharmacy (DPLO)

Expected Offering Date: Thursday

Diplomat Pharmacy is the US’s largest independent specialty pharmacy, with a focus on patients with complex chronic diseases. Growth has certainly been strong. From 2005 to 2013, revenues grew at a compound annual rate of 65% to $1.5 billion. Yet the firm still only has a 2% market share.

For the most part, the company’s patients require recurring treatments. And some of the specialties include oncology, immunology, hepatitis, multiple sclerosis and HIV.

Diplomat Pharmacy expects to issue 13.3 million shares at a range of $14 to $16. The lead underwriters include Credit Suisse (CS), Morgan Stanley (MS), J.P. Morgan (JPM) and Wells Fargo Securities (WFC).

New Stocks to Watch: HubSpot (HUBS)

Expected Offering Date: Thursday

HubSpot operates a cloud-based system that helps companies with marketing and social media campaigns. Some of the benefits include search engine optimization, CRM, outbound email and analytics.

For the first half of this year, revenues jumped by 46% to $51.3 million. There are currently 11,624 customers.

But the losses have continued. For the year so far, they came to $17.7 million, and the company has only $7 million in the bank.

HubSpot plans to issue 5.75 million shares at a range of $19 to $21. The lead underwriters include Morgan Stanley, J.P. Morgan and UBS Investment Bank (UBS).

New Stocks to Watch: MOL Global (MOLG)

Expected Offering Date: Thursday

MOL Global is the largest e-payment enabler in Southeast Asia, with a network of 970,000 physical locations across 13 countries. The company’s technology works on mobile devices and is integrated with the online banking systems of over 100 banks. Some of the offerings include Facebook (FB) credits for games and payments for prepaid mobile airtime and content.

For the first half of 2014, revenues increased by 34% year-over-year to $105 million and adjusted EBITDA increased by 25% to $25 million.

MOL Global expects to issue 22.4 million shares at a range of $12.50 to $14.50. The lead underwriters include Citi (C), Deutsche Bank (DB) and UBS Investment Bank.

New Stocks to Watch: NeuroSigma (NSIG)

Expected Offering Date: Thursday

NeuroSigma is a medical device company that is developing systems for the treatment of neuropsychiatric disorders such as epilepsy and depression. The company’s lead product is already approved in the European Union, Canada and Australia. As for the U.S. market, the device is pivotal trials.

So far, the company is in the early stages of generating revenues. For the first half of this revenues, revenues were about $24,000 and the operating loss was $7.5 million.

NeuroSigma intends to sell 3.6 million shares at a range of $13 to $15. The lead underwriter is Jefferies & Co.

New Stocks to Watch: OM Asset Management (OMAM)

Expected Offering Date: Thursday

OM Asset Management has $214.9 billion in assets under management. The parent company is Old Mutual, which is a global investment, insurance and banking firm whose roots go back to 1845.

OM Asset Management includes more than 100 portfolios, with categories like emerging markets, fixed income, real estate and even timber investments. From 2011 to 2013, the ENI (economic net income) grew from $435.2 million to $527.5 million.

OM Asset Management expects to issue 22 million shares at a range of $15 to $17. The lead underwriters include Bank of America Merrill Lynch (BAC), Morgan Stanley, Citi and Credit Suisse.

New Stocks to Watch: USD Partners LP (USDP)

Expected Offering Date: Thursday

USD Partners is a master limited partnership that is focused on acquiring and developing energy-related rail terminals and other types of complementary midstream assets. The initial properties include an origination crude-by-rail terminal in Hardisty, Alberta, Canada, with capacity to load up to two 120-railcar unit trains per day and two destination unit train-capable ethanol rail terminals in San Antonio, Texas, and West Colton, California, with a combined capacity of approximately 33,000 barrels per day (bpd).

For the first half of this year, revenues came to $10.9 million, down by 18%. There was also adjusted EBITDA of -$1.5 million.

USD Partners expects to issue 8.9 million shares at a range of $19 to $21. The lead underwriters include Citi, Barclays (BCS), Credit Suisse and BofA Merrill Lynch.

New Stocks to Watch: Veritex Holdings (VBTX)

Expected Offering Date: Thursday

Veritex Holdings is a bank holding company, which has eight branches located in the Dallas metropolitan area. For the most part, the bank focuses on small and medium-sized businesses (with revenues under $30 million).

For the first half of this year, net income increased by 48% to $2.1 million.

Veritex Holdings expects to sell 2.7 million shares at a range of $12 to $14. The lead underwriters include Sandler O’Neill and Stephens.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll 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.


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