Last year saw plenty of excitement out of the IPO market. All told, 268 companies came public with an average return of about 21%, and 24 IPOs generated gains of more than 100%.
And there’s a lot more runway this year.
What hot IPOs could we see? Well-known companies such as Airbnb and Snapchat certainly would gin up intense excitement, but the private capital markets are extremely liquid, and there’s little pressure for these particular operators to go public.
But a number of well-known companies are in a much more logical place to tap the public markets for funds. In fact, there are five in particular that look like great IPO candidates for 2015. Let’s take a look.
IPO Prospect #1: Smashburger
The burger market is the largest dine-out segment in the United States, boasting $72 billion in sales — twice the size of the pizza market.
The burger market also is undergoing major changes as consumers want higher-quality offerings. Wall Street already has caught on to this trend — just look at the successful IPOs of Habit Restaurants Inc (NASDAQ:HABT) and Shake Shack.
Given all this, it wouldn’t be surprising to see another deal get done in the burger space. And Smashburger seems like a likely candidate.
Founded in 2007, Smashburger has been on a strong growth ramp that has seen revenues shoot up from $39.4 million in 2010 to $109.1 million in 2013. Smashburger now sports 300 locations across 34 states and four countries.
And anecdotally, Smashburger knows how to make tasty food. The burgers are made from fresh, 100% certified Angus beef (which is never frozen), it offers thick milkshakes and it even serves beer and wine.
But note that Smashburger isn’t without a little turbulence. Its former CEO, David Prokupek, is suing the company for millions in unpaid severance from his firing.
IPO Prospect #2: Etsy
According to a recent Bloomberg report, it looks like e-commerce operator Etsy expects to launch an IPO to raise $300 million sometime during the current quarter.
Etsy, which got its start a decade ago, operates a hugely popular online marketplace for crafts that has attracted nearly 44 million members, 1.2 million active shops and 26 million listed items.
A few reasons to be optimistic should Etsy come public is the company’s financials — it has been profitable since 2009, and the company doesn’t have inventory costs.
IPO Prospect #3: Shopify
In 2006, Tobias Lütke, Daniel Weinand and Scott Lake built an e-commerce site to sell snowboards. In the process, they realized there was a much bigger opportunity: helping other merchants build their own e-commerce sites.
But over the years, Shopify has evolved its systems. For example, it now has rich mobile features, as well as point-of-sales systems for brick-and-mortar retailers. Such moves have been effective in dealing with tough competitors like Amazon.com, Inc. (NASDAQ:AMZN) and eBay, Inc (NASDAQ:EBAY).
According to a report in the Wall Street Journal, it looks like Shopify may attempt an IPO this year. The company has retained Morgan Stanley (NYSE:MS), Credit Suisse Group AG (NYSE:CS) and RBC Capital Markets.
IPO Prospect #4: Fitbit
Fitbit looks poised for an IPO in 2015, according to a Bloomberg report. And the timing looks good, as investors certainly have an appetite for wearables — people are eating up product possibilities from the likes of Nike Inc. (NYSE:NKE), Garmin Ltd. (NASDAQ:GRMN) and Apple Inc. (NASDAQ:AAPL), and of course the GoPro Inc (NASDAQ:GPRO) was a big success.
Fitbit’s core product is a wristband that tracks a person’s health vitals like the heart rate, calories and number of steps taken. However, Fitbit might be rushing to market because of the advances by those previously mentioned companies, who certainly count among Fitbit’s rivals.
Still, Fitbit isn’t without punch, and its innovation could keep it ahead of the game. Before the holiday shopping season, the company launched the Fibit Surge — a “superwatch” with features such as continuous heart rate monitoring, multisport functions and smart notifications for your phone.
The company also now has the Fitbit Charge HR, which features a seven-day battery life — a direct response to consumer complaints.
IPO Prospect #5: Uber
Uber, which allows people to hail a privately driven car using their smartphones, doesn’t really need to go public to raise money. Already, Uber has pulled in about $4 billion in debt and equity financing.
Still, an IPO would provide even more visibility for the firm, especially as it continues an aggressive expansion campaign. Being a large public operator certainly would make a statement about Uber’s place in the space.
Of course, Uber is rife with controversy. It seems to face lawsuits in every market it does business in — in large part because it’s hugely disruptive to local taxi industries, but also because various incidents have put Uber’s backround checking techniques into question.
But Uber has the resources to deal with these problems — and its investors do not appear to be nervous.
That said, an IPO is really the only option left for Uber to cash out. At a valuation of more than $41 billion, Uber is simply too rich to fetch a buyout offer. And when Goldman Sachs Group (NYSE:GS) put together a $1.6 billion convertible debt financing, it created bonds that would turn into stock at a 20% to 30% discount to whatever Uber’s valuation is at the time of an IPO.
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.