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While there have been 54 IPOs so far this year, not every single stock to go public is worth your attention. To help, we’ve compiled a list of the top four IPO stocks to watch.
While we don’t recommend buying these stocks, they are worth watching until we see a year’s worth of earnings reports. Once the first annual report for these companies comes out, we’ll have a better idea of the profit potential of each one.
In the meantime, we have a way to profit from some of the hottest IPOs without owning the stock. This will help you steer clear of IPO flops.
But these IPOs have all gotten a lot of investor attention this year, which is why we are adding them to our stocks to watch list. Here’s the full list of the top IPO stocks to watch this year and what to look for.
Top IPO Stocks to Watch Today No. 4: Okta Inc. (Nasdaq: OKTA)
Okta Inc. (Nasdaq: OKTA) is a cloud company headquartered in San Francisco. The company provides a secure interface with corporate tools when employees are not in the office.
Currently, Okta stock is trading at $23.90. This is a gain of $0.80 (3.5%) over its IPO price of $23.10 in early April.
The IPO valued the company at roughly $1.54 billion, which is 22% higher than its September 2015 valuation during a previous round of funding. That valuation was $1.2 billion.
This quarter, analysts expect EPS to be -$0.62. However, that loss per share is expected to decline to $0.26 for the following quarter.
Revenue is expected to increase from $48.23 million this quarter to $53.98 million next quarter.
With the potential demand likely to increase as more employees need access to corporate tools and data outside of the office, OKTA stock is expected to rise. The one-year price target for OKTA is $28.00 for a gain of 17%.
Top IPO Stocks to Watch Today No. 3: Mulesoft Inc. (NYSE: MULE)
Mulesoft Inc. (NYSE: MULE) is focused on application programming interfaces (API) that allow various apps and technology to communicate with each another. Its software provides more streamlined integration of technology offerings for corporations, allowing for easier access to data across a network and the cloud.
Analysts expect Mulesoft to have revenue of $265.75 million this year and $361.22 million next year.
Despite growing revenue, the company is expected to lose $0.44 per share this year and $0.40 per share next year.
Originally, Mulesoft had a price target between $12 and $14 for its IPO. However, the stock ended up debuting at $17 a share to raise $221 million in March.
MULE stock is trading at $22.29 for a gain of 31% in under two months. The one-year price target is $26.14 for a gain of 17% over its current stock price.
This next company sparked protests at its IPO but is expected to rise over 10% in the next year…
Top IPO Stocks to Watch Today No. 2: Canada Goose Holdings Inc. (NYSE: GOOS)
Canada Goose Holdings Inc. (NYSE: GOOS) is a Toronto-based maker of outdoor apparel.
Canada Goose went public on the NYSE in March with an IPO price of $18 to raise about $255 million.
During its first day of trading on the NYSE, animal rights protestors targeted passersby who were wearing the company’s fur-lined coats.
The company is expected to have EPS of $0.28 for 2017 and $0.35 for 2018.
Revenue is also expected to increase between this year and next. This year, revenue is expected to be $287.02 million. Next year, revenue is expected to grow to $340.59 million.
GOOS stock is trading for $17.20. The one-year price target is $19.14 for a gain of 11%.
Top IPO Stocks to Watch Today No. 1: Snap Inc. (NYSE: SNAP)
Snap Inc. (NYSE: SNAP), the parent company of popular social media app Snapchat, made its debut on March 2. The highly anticipated IPO was priced at $17 a share, raising $3.4 billion for the company.
This year, revenue is expected to be $1.03 billion. Next year, revenue is expected to increase to $2.05 billion.
However, the company is not expected to become profitable in the next two years. This year, the company is expected to lose $0.51 a share. Next year, those losses are expected to improve to $0.30 a share.
Recently, three Wall Street investment banks rated SNAP a “Buy.” They were Goldman Sachs Group Inc. (NYSE: GS), Citigroup Inc. (NYSE: C), and Jefferies Group LLC (NYSE: JEF). Despite these “Buy” ratings, the company is still rated a “Hold” on average.
SNAP is currently trading at $23.11, a gain of 36% since its IPO. The one-year price target is $23.48 for a gain of 1.6%.
Outpace the Market with This Better IPO Investment
But most IPOs don’t turn out to be the next industry disruptor with virtually unlimited profit potential. Twitter Inc. (NYSE: TWTR) is a good example of this.
When the company went public in November 2013, it was a highly anticipated IPO. Most thought it could overtake Facebook Inc. (Nasdaq: FB) for social media dominance. However, the company has struggled to become profitable and keep its user base growing. As a result, the stock is down 56% since its IPO.
The good news is we’ve found a way to avoid the disaster that can often come with investing in dud IPOs while still profiting from the exceptional hype IPOs create, without having to buy their stocks. That solution is the First Trust U.S. Equity Opportunities ETF Fund (NYSE Acra: FPX).
FPX holds a mix of well-established companies as well as recent IPOs, making it much less risky than buying IPOs. (For a complete look at how the ETF picks stocks, check out this article.) One of the most notable recent IPOs the ETF holds is Snap Inc. (NYSE: SNAP).
Currently, FPX is beating the market. So far this year, the fund is up 8.7%, while the Dow is only up 6.3%. Over the past five years, the FPX has gained 111.9%, while the Dow has gained almost half of that at 61.1%. The ETF is a great growth investment while also limiting your potential losses, the best of both worlds.