A host of high-profile private companies hit Wall Street this year, debuting across various prominent sectors. These “unicorns,” Wall Street’s term for a fast-growing startup company, definitely have the potential to make it big, given their impressive journey since their initial public offerings (IPOs).
Although many well-known companies such as Uber Technologies, Inc. UBER, Lyft, Inc. LYFT and Pinterest, Inc. PINS have joined the long list of IPOs this year, their price performances failed to make an impact on the U.S. stock market.
However, thanks to the better-than-expected performance of various other IPOs, the Renaissance IPO ETF (IPO), which is a basket of newly public companies, soared 33.8% on a year-to-date basis. The S&P 500, in comparison, has increased 28.4% in the same timeframe.
According to Renaissance Capital, more than 50% of the newly listed companies were trading higher than their issue price at the end of the year, compared with about 40% last year.
Taking a look at the price performances of some of the IPOs this year, one needs to consider the nature of products and services these companies offer and their respective business models.
For example, healthcare and technology sectors saw some of the best IPOs for the fifth consecutive year in 2019. Medical device companies and consumer staple companies that offered innovative, high-on-consumer-demand products, and technology companies particularly stood out.
In addition, the newly publicly traded companies’ strong balance sheet, upbeat cash flows and rising revenues were also instrumental in boosting their price performances so far this year. Needless to say, these factors could help the stocks reap further gains ahead.
We have, therefore, chosen five stocks that went public this year and have performed impressively so far. All of these stocks carry a Zacks Rank #2 (Buy) or 3 (Hold).
Beyond Meat, Inc. BYND is a manufacturer of plant-based meat substitutes. The El Segundo, CA-based company offers alternative meat products in the platforms of beef, pork and poultry.
Beyond Meat witnessed its stock price surge 163% during the trading session on May 2, increasing from $25 a share to $65.75. The company’s share prices have been up 16.4% since then, settling at $77.73 at the end of Dec 24. Beyond Meat raised about $240 million through its IPO’s sale of 9.6 million shares.
The demand for Beyond Meat’s products is primarily driven by traditional meat-eaters who seek plant-based meat alternatives for health reasons or out of concern for environmental impact. In addition, the company is gaining from high-end partnerships such as with Dunkin' Brands, Dave & Buster's Entertainment and YUM! Brands.
The Zacks Consensus Estimate for the company’s current-year earnings has risen 13% over the past 60 days. Beyond Meat carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zoom Video Communications, Inc. ZM offers a video-first communications platform, which helps people connect through frictionless video, voice, chat and content sharing.
Zoom Video Communications witnessed its stock price rise 72% during the trading session on Apr 18, increasing from $36 a share to $62. The company’s share prices have been up 7.2% since then, settling at $66.46 at the end of Dec 24. Zoom raised $356.8 million after selling 9.91 million shares in its initial public offering.
In third-quarter fiscal 2020, Zoom’s revenues were driven by the acquisition of new customers and expansion across the existing customer base. The company also reported expansion to their new Zoom Rooms Appliance Program, Zoom Phone service and capabilities. The company’s revenues for the quarter were $166.6 million, up 85% year over year.
The Zacks Consensus Estimate for the company’s current-year earnings has risen 36.8% over the past 60 days. Zoom Video Communications carries a Zacks Rank #2.
Karuna Therapeutics, Inc. KRTX is a clinical-stage biopharmaceutical company. The company emphasizes developing novel therapies to tackle disabling neuropsychiatric conditions characterized by significant unmet medical needs.
The company’s share prices have been up 289.1% since its debut on Jun 28, settling at $75.69 at the end of Dec 24. Karuna raised $102.6 million in its initial public offering, pricing 6.41 million shares at $16 each.
The company’s strong rally is largely due to the result of its innovation in lead therapy, KarXT for psychotic symptoms in schizophrenia. Karuna Therapeutics’ operations in this area of brain diseases make it a major player in the arena.
The Zacks Consensus Estimate for the company’s current-year earnings has risen 14.5% over the past 60 days. Karuna Therapeutics carries a Zacks Rank #2.
Turning Point Therapeutics, Inc. TPTX is a San Diego-based developer of targeted cancer drugs. The company designs and develops novel small molecule targeted oncology therapies.
Turning Point Therapeutics’ share prices have been up 128.8% since its debut on Apr 17, settling at $61.04 at the end of Dec 24. Turning Point sold 9.25 million shares at $18 (the top of its pricing range), raising $166.5 million before underwriter discounts and commissions.
Turning Point Therapeutics’ impressive performance is a result of its engagement in the development of small-molecule cancer treatments, which has garnered investor focus. The stock carries a Zacks Rank #3.
Silk Road Medical, Inc SILK is a medical device company. The Sunnyvale, CA-based company is focused on decreasing the risk of stroke and its distressing impact.
Silk Road Medical’s share prices have been up 10.1% since its debut on Apr 4, settling at $39.82 at the end of Dec 24. The company sold 6 million shares at $20 (the top of its pricing range), raising about $120 million before deducting underwriting discounts and commissions and other offering expenses.
The stock has witnessed demand because of rising adoption of transcarotid artery revascularization process for the treatment of carotid artery disease and could continue to do so ahead. Silk Road Medical carries a Zacks Rank #3.
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2020?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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