Wall Street has been witnessing a frenzy of initial public offerings (IPOs) for quite some time now. As the global health crisis hit the financial markets in the initial months of 2020, the first half of the year turned out badly for…
the IPO markets. After a subtle recovery in the economies and the announcement of stimulus packages in June, the IPOs delivered a ground-breaking performance in the second half of 2020, pushing the trend in 2021 as well.
According to a report by Baker McKenzie, in 2020, the IPO activity was recorded highest in a decade with 1,591 listings raising $331 billion across the world. Some of the high-profile companies that debuted on the market in 2020 include Airbnb, Inc. (NASDAQ: ABNB), Snowflake Inc. (NYSE: SNOW), DoorDash, Inc. (NYSE: DASH), and Palantir Technologies Inc. (NYSE: PLTR). The Renaissance IPO Index, an index listing the newly public companies in the U.S., gained 44.07% in the past year, versus 31.7% gains of S&P 500 index.
As 2021 followed the course, many big names launched their IPOs. According to a report by Ernst & Young, the first half of 2021 has seen a 150% annual increase in IPOs, as 1,070 IPOs have raised $222 billion in proceeds.
Some of the big names that went public in 2021 so far include UiPath Inc. (NYSE: PATH), Coupang, Inc. (NYSE: CPNG), Robinhood Markets, Inc. (NASDAQ: HOOD), and Procore Technologies, Inc. (NYSE: PCOR). Coupang, Inc. (NYSE: CPNG) had one of the biggest IPOs of 2021 so far with a $60 billion valuation. The company raised $4.6 billion in its IPO.
Investing in IPOs is somehow beneficial for investors as the initial share price can be of good value. The data collected by an IPO expert Jay Ritter states that in 2020, the average first-day return for IPOs was 41.6%. However, one should not invest blindly in IPO stocks. According to Forbes, only 40% of the IPOs from 1975 to 2011 generated profits five years after they went public, while 60% of them failed to make their mark in the financial market.
With this context, let’s analyze our list of the 11 best IPO stocks to buy now. We took into account companies that went public in 2020 and 2021, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks. By “IPO stocks” we mean companies that went public recently.
Investing is becoming difficult by the day, even for the smart money. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
11 Best IPO Stocks to Buy Now
11. AppLovin Corporation (NASDAQ: APP)
IPO Date: April 15, 2021 Number of Hedge Fund Holders: 16
AppLovin Corporation (NASDAQ: APP) is a global software company that provides solutions to mobile app developers to grow their apps. Over 9,000 developers are using the company’s software with customers in over 130 countries. AppLovin Corporation (NASDAQ: APP) ranks eleventh on our list of the best IPO stocks to buy now.
AppLovin Corporation (NASDAQ: APP) went public on…
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