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The Hottest IPO Deals After the August Break

Here's a look at some of the upcoming IPOs after summer


It’s going to get fairly quiet here at the IPOPlaybook — at least through early September or so. There’s nothing to get alarmed about. A quiet period toward the end of summer is normal for the new stocks market, as many traders go on vacation.

Actually, when things get started again, it looks like the activity will continue to be robust. True, biotech deals look a bit overdone, but investors still have a hunger for quality deals. Just look at some of the recent IPOs like GoPro (GPRO), El Pollo Loco (LOCO) and Mobileye (MBLY).

OK, so what are the offerings to expect after the August break? Well, based on recent filings, there are some interesting new stocks to consider.

Here’s a look:

New Stocks to Watch: Alibaba (BABA)

alibaba ipo baba stockOf course, this is the most anticipated IPO of the year. Alibaba could raise as much as $20 billion, making it the largest tech offering in history.

The company, founded in the late 1990s, is the largest e-commerce operator in China. The business model involves charging a fee for merchants that list their products on its mobile and online platforms. Alibaba also has other businesses, including the cloud and payments.

Despite its large size, the company has had no problem cranking out growth. In fiscal 2014, revenues jumped by 52.1% to $8.4 billion and net income spiked by 170.6% to $3.8 billion.

Yet the market opportunity is still massive for Alibaba. China’s online shopping population is underpenetrated, with about 302 million. But the total Internet population is 618 million — and growing.

New Stocks to Watch: Virgin America

Virgin America is a young airline, having launched its operations back in 2007. As should be no surprise, there were substantial losses along the way as the company built out its infrastructure.

But now it looks like Virgin Airlines is on track for sustained profitability. And yes, this makes the timing of an IPO spot-on. In fact, Wall Street has been giddy with airline stocks, as seen with the heady returns for American Airlines (AAL) and Delta Air Lines (DAL).

Like other Virgin businesses — which are the mastermind of billionaire Sir Richard Branson — the airline has a focus on top-notch amenities and customer service. According to the S-1:

“Other elements of our premium product available fleetwide include power outlets adjacent to every seat, inflight wireless internet access, distinctive on-board mood lighting, leather seats, high-quality food and beverage offerings and our industry-leading Red® inflight entertainment system featuring a nine-inch personal touch-screen interface with a variety of features available on-demand, including live television, movies, seat-to-seat text chat, games, interactive maps and music.”

Another big advantage is the company’s young fleet. Virgin America has less ongoing maintenance and better fuel efficiency compared to its competitors. The company also recently snagged key routes at Dallas Love Field, which should provide more opportunities for expansion.

In terms of the financials, Virgin American generated $1.4 billion in revenues and $80.9 million in operating income in 2013.

Given all this, the company should be among the hottest new stocks for the year.

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New Stocks to Watch: Vivint

During the past couple years, one of the top IPOs has been SolarCity (SCTY), up a incredible 776%. Then again, the company has Elon Musk as a co-founder — the man who has also created breakout companies like SpaceX and Tesla (TSLA).

But maybe investors will get a second bite at the apple? Perhaps so. A rival to SolarCity, Vivint, has made a confidential filing for an IPO, according to a report from Reuters.

Founded in 1999, Vivint started with a focus on home security systems. While the business turned out to be successful, the company would eventually move into other categories, such as home automation systems and even solar installations.

Then in 2012, Blackstone (BX) shelled out $2 billion for Vivint. From there, the private equity powerhouse continued to invest heavily in the company.

As of now, there are more than 800,000 customers. Although, Vivint still has some catch-up to do. The current market share is a mere 9%, compared to SolarCity’s 29%.

New Stocks to Watch: Line

Mobile messaging has become one of the killer apps for most devices, and it has been generating huge returns for investors. Just look at Facebook’s (FB) $19 billion purchase of WhatsApp. Of course, there have been large fundings for other operators like SnapChat and Tango.

Now maybe retail investors will get a piece of the action: According to a report in Bloomberg, a mega Asian messaging firm, Line, has made a confidential S-1 filing. It looks like Morgan Stanley (MS) will lead the deal.

Line has seen more than 480 million downloads, and the engagement levels appear to be extremely high. The service allows for the sending of graphics and video, as well as VoIP calls. Line got its start back in March 2011 in response to the mega earthquake in Japan.

In short order, Line has turned into a money marker. In the first quarter, revenues soared more than 3 times to $145 million.

And what about the valuation? The buzz is that a Line IPO could be worth more than $20 billion.

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.

Article printed from InvestorPlace Media,

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