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Here’s a recap of the hottest IPOs from this week, with some details on whether any are worth buying now.
IPOs hit the market every week. Most fly under the radar because they don’t get hyped up by Wall Street. But that doesn’t mean they won’t be great growth stories.
Granted, there are disaster stories like Wayfair (NYSE: W), which is down 37% from its IPO just last month. But the majority of IPOs tend to outperform the market in the first couple years after going public. Over the last six months, the Renaissance IPO ETF (NYSEArca: IPO) has outperformed the S&P 500 by nearly five percentage points.
With that in mind, let’s examine the most recent initial public offerings. Here were the top IPOs this week, in chronological order:
Top IPO From This Week No. 1: Ehi Car Services Ltd (NYSE: EHIC)
Hitting the market on Tuesday was Ehi Car Services — a roughly $650 million market cap Chinese car rental company. It’s the number two provider of car rentals in China. It’s also a major player in the car sharing movement there. The market in China remains fragmented and that’s where Ehi thinks it can grow — by being an industry consolidator.
It is well known that China has a pollution problem and perhaps Ehi could help lower emissions. However, even after being in business for eight years, the company remains unprofitable.
It has generated $100 million in revenues over the last 12 months and shares have traded as high as $13, but the stock now trades right at its IPO price of $12.
Top IPO From This Week No. 2: STORE Capital Corp (NYSE: STOR)
Also pricing on Tuesday was STORE Capital, a real estate investment trust (REIT) with a $2.2 billion market cap. STORE is actually an acronym for “Single Tenant Operational Real Estate” — meaning Store’s properties focus on just one customer, such as a major restaurant or a grocery store. It owns just under 800 properties spread across more than 40 states. Shares are trading roughly 7% above their IPO price of $18.50.
Top IPO From This Week No. 3: Second Sight Medical Products Inc (NASDAQ: EYES)
On Wednesday, Second Sight Medical was one of the market’s most exciting stories. Shares priced at $9 and are now trading at over $20 a share, at one point rising as high as $24.
This $700 million market cap company is a maker of implantable visual prosthetics. Basically, Second Sight Medical is looking to help the blind see and the deaf hear. The company was actually responsible for restoring the sight of a 66-year-old man who had been blind for half his life — he was on Bloomberg TV yesterday and can be seen here.
However, the company isn’t without risks. Over the last 12 months it has generated just $2.4 million in revenue and posted a net loss. It’s already trading at over 300 times sales.
Top IPO From This Week No. 4: Paramount Group Inc (NYSE: PGRE)
Also debuting on Wednesday, and perhaps overshadowed by Second Sight Medical, was Paramount Group. This $3.5 billion market cap company is another REIT. It focuses on office buildings in major markets, owning 17 properties across New York City, San Francisco and Washington, D.C. The stock is trading about 5% above its $17.50 IPO price.
Top IPO From This Week No. 5: Habit Restaurants Inc (NASDAQ: HABT)
Habit started trading yesterday and has been another big IPO success. The stock has already doubled from its $18 IPO price.
Habit runs the burger chain, Habit Burger Grill, which has close to 100 restaurants across four states.
Habit has been in business since 1969, but the company didn’t really start growing until 2008. In the six years since, Habit has tripled its stores. that has everything to do with a 2007 buyout by private equity firm KarpReilly.
Habit competes in the fast growing “fast casual” space — think Chipotle Mexican Grill (NYSE: CMG) and Zoe’s Kitchen (NYSE: ZOES). Yet, its value proposition is that its average ticket price is lower than the majority of fast casual restaurants. And Habit still has a lot of expansion potential in a burger industry that’s ripe for innovation. McDonald’s can attest to that.
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Habit Restaurants and Second Sight Medical soared out of the gate, proving that fast casual and tech are still in fashion. The biggest surprise might be Ehi Car Services, which traded sideways despite bringing a Silicon Valley flair to China with car sharing.
Also, it was a strong week for REITs, which should be a positive sign for income seekers.
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