Top Picks: The Best IPOs to Buy Right Now

As the IPO market begins to heat up after a prolonged period of inactivity, investors are eagerly eyeing the latest and most promising opportunities. Initial Public Offerings (IPOs) offer a unique chance to invest in companies at the beginning of their public journey, often leading to significant gains if chosen wisely. While IPO stocks are generally riskier than established stocks, the potential for high returns makes them an attractive option for many. In this article, we will explore some of the top IPOs to consider right now, including both well-known names and emerging players in various industries.

Key Takeaways

• The IPO market is gaining momentum after a long lull, attracting investor interest.
• Instacart, Birkenstock, and Arm are among the recent high-profile IPOs.
• Investing in IPO stocks can be riskier than the broader market, but also offers potential for high returns.
• Nvidia, Amazon, and Apple are examples of companies that have turned early IPO investments into substantial gains.
• Emerging IPOs in sectors like healthcare, online marketplaces, and celebrity clothing brands are also worth watching.

Instacart

Instacart's business took off during the pandemic. It was a natural fit with the stay-at-home period when Americans were reluctant to visit grocery stores.

Although you might guess that the business has receded since then -- like a number of e-commerce winners -- Instacart has continued to grow, building an impressive advertising business as well.

Its gross transaction value reached $30.3 billion in 2022, up 5% from 2022, and total revenue jumped 19% to $3.04 billion. Instacart is also profitable on the basis of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) with $641 million in EBITDA.

The addressable market in grocery is massive at roughly $1 trillion, and Instacart is the leading e-commerce platform for supermarkets. If the company executes on its growth plan, the stock has a lot of room to run higher.

25% upon launch. This was attributed to its robust business model, innovative technology and strong financials, which resonated well with investors looking for stable growth in a turbulent market. On the other hand, another tech company Maplebear, which does business as Instacart (CART), faced challenges in the competitive market, impacting its stock performance. By the end of 2023, its share price had declined from an initial $42 per share to $23 per share.

Grocery delivery specialist Instacart (CART -0.71%) had been mulling an IPO for years before it finally pulled the trigger on its debut in September 2023.

Birkenstock

Overview

Birkenstock, a 249-year-old sandal brand, isn't your typical IPO. The company went public on October 11, 2023, and has since garnered significant attention. With a well-known brand and a capable management team, Birkenstock is poised to be a strong contender in the footwear industry.

Financial Performance

Birkenstock Holding plc (NYSE:BIRK) has received Buy-equivalent ratings from 11 Wall Street analysts. The average price target of $49.57 represents an upside of 9% from current levels. As of the fourth quarter of 2023, 19 hedge funds held stakes in the company, amounting to $379.877 million.

Market Trends

The company has undergone significant changes in the last decade. The family that owns Birkenstock brought in professional management, launched the Birkenstock.com website, opened company-owned stores, and took control of its distribution network. These initiatives have driven strong revenue growth and margin expansion.

Investment Perspective

A number of footwear stocks have delivered strong returns, and Birkenstock could be the next winner. The company's ability to raise its average selling prices and introduce new models has expanded its product selection, making it a compelling investment.

Birkenstock's recent IPO and strategic initiatives make it a noteworthy option for investors looking to diversify their portfolios.

Actionable Insights

• Consider adding Birkenstock to your investment portfolio for potential long-term gains.
• Monitor the company's quarterly earnings reports to stay updated on its financial performance.
• Keep an eye on market trends and consumer preferences in the footwear industry to gauge future growth potential.

Arm

Financial Performance

Arm Holdings plc (NASDAQ:ARM) has shown impressive financial performance since its IPO on 09/14/2023. The company reported a non-GAAP EPS of $0.36 in Q4 2023, beating analysts’ estimates by $0.06. Revenue increased by 46.6% year-over-year to $928 million, surpassing estimates by $49.76 million. Shares soared as high as $69 on September 15 but have since pulled back to the low $50s. As of May 10, Arm has Buy-equivalent ratings among 18 analysts, with an average price target of $119.27, indicating a 9.6% upside from present levels.

Market Position

Arm is a prominent U.K. chip designer known for making central processing units (CPUs) and has expanded into graphics processing units (GPUs) and microprocessors. The company uses a special kind of architecture called RISC (reduced instruction set computer), which makes it easier for computers to receive the code that makes them run. Arm chips are widespread among consumer products, including smartphones and digital televisions, and are key components in artificial intelligence (AI), cloud computing, and autonomous driving.

Investment Potential

The debut of Arm Holdings was the biggest since 2021, with shares opening at $56.10 and rising nearly 25% on the first day. The stock has attracted significant interest, with 22 hedge funds holding stakes worth $1.52 billion as of Q4 2023. On May 9, JPMorgan raised the price target on Arm to $115 from $100 and maintained an Overweight rating on the shares. The company's strong market position and financial performance make it a compelling investment opportunity.

Arm Holdings' expansion into GPUs and microprocessors, along with its RISC architecture, positions it well for future growth in various tech sectors.

Actionable Insights

• Consider buying Arm Holdings plc (NASDAQ:ARM) shares, especially if they dip below $50, to capitalize on potential upside.
• Monitor analyst ratings and price targets, as the stock has a 9.6% upside from current levels.
• Keep an eye on market trends in AI, cloud computing, and autonomous driving, as these sectors heavily rely on Arm's technology.

Stripe

Overview

Stripe, founded in 2010 by brothers Patrick and John Collison, has revolutionized the online payments industry with its easy-to-use system. The company provides cloud software that allows businesses to seamlessly process payments using just a few lines of code. Despite the recent valuation cut from $95 billion to $50 billion due to the tech stock crash, Stripe remains a major player in the payments industry.

Financial Performance

In March 2023, Stripe raised $6.5 billion from existing and new investors, bringing its valuation to $50 billion. This cash haul is not needed to fund operations but will be used for stock buybacks and to cover tax bills related to stock awards. The company has faced some challenges, including a 14% workforce reduction, but it continues to show resilience.

Market Trends

The growth prospects for the payments industry look bright as more transactions continue to move online. Stripe is well-positioned to benefit from this trend, despite having a large number of startups as customers, which have seen decelerated growth.

IPO Prospects

Stripe is considered one of the most anticipated IPOs in the market. While the company has not officially announced plans to go public, it has taken steps toward a market debut, including tapping a law firm to guide it through the process. The company is planning on a direct listing instead of a traditional IPO since it doesn't need to raise new funds.

Stripe's potential IPO could be a game-changer in the payments industry, offering investors a unique opportunity to capitalize on the growing trend of online transactions.

Actionable Insights

• Keep an eye on Stripe's IPO announcements and market debut plans.
• Consider the company's strong market position and growth prospects when evaluating investment opportunities.
• Be aware of the risks associated with the tech industry and the company's recent valuation changes.

Nvidia

Nvidia (NVDA) has emerged as a dominant player in the artificial intelligence (AI) revolution, thanks to its cutting-edge GPUs (graphics processing units). These GPUs are essential for handling the complex processing required by AI models, making Nvidia a key beneficiary of the AI boom.

Financial Performance

Nvidia's recent financial performance has been nothing short of spectacular. The company reported blowout first-quarter results, which led to a significant surge in its stock price. Additionally, Nvidia announced a stock split and a dividend hike, further boosting investor confidence.

Market Trends

The AI chip market is becoming increasingly competitive, with various startups aiming to capture a share of this lucrative sector. However, Nvidia's established presence and continuous innovation give it a competitive edge. The company's focus on AI and machine learning applications positions it well for future growth.

Investment Perspective

For investors, Nvidia offers a compelling opportunity. The company's strong financials, coupled with its leadership in the AI space, make it a solid pick for those looking to invest in technology stocks. If you own funds or ETFs, you probably have ample exposure to Nvidia stock already.

Nvidia's strategic moves, including its stock split and dividend hike, indicate a commitment to delivering value to shareholders. This makes it an attractive option for both short-term gains and long-term investment.

Actionable Insights

• Consider adding Nvidia to your portfolio if you are looking for exposure to the AI and tech sectors.
• Keep an eye on market trends and competitive dynamics in the AI chip market.
• Monitor Nvidia's quarterly earnings and strategic announcements for potential investment opportunities.

Amazon

Financial Performance

Amazon.com (AMZN) has started strong in 2024, returning to record share value after a downbeat 2022 that put shares in recovery mode during 2023. The company's robust financial performance is driven by its diversified business model, which includes e-commerce, cloud computing, and digital streaming services. Investors are optimistic about Amazon's ability to sustain growth despite economic uncertainties.

Market Trends

The market trends for Amazon are favorable, with increasing demand for online shopping and cloud services. Amazon Web Services (AWS) continues to be a significant revenue driver, contributing substantially to the company's overall profitability. The leadership change at AWS is expected to bring fresh perspectives and strategies to maintain its competitive edge.

Investment Perspective

From an investment perspective, Amazon remains a strong contender. The company's continuous innovation and expansion into new markets make it a viable option for long-term investors. Key factors to consider include its market dominance, financial health, and strategic initiatives.

With its diversified portfolio and strong market position, Amazon is well-equipped to navigate future challenges and capitalize on emerging opportunities.

Actionable Insights

1. Monitor Amazon's quarterly earnings reports to stay updated on its financial health.
2. Keep an eye on the performance of AWS, as it is a crucial revenue stream for the company.
3. Consider the impact of leadership changes on the company's strategic direction.
4. Evaluate Amazon's expansion into new markets and its potential for growth.

Conclusion

In conclusion, Amazon's strong financial performance, favorable market trends, and strategic initiatives make it a top pick for investors looking to buy IPOs right now. Its ability to adapt and innovate ensures its continued success in the ever-evolving market landscape.

Apple

Financial Performance

Apple Inc. has consistently demonstrated robust financial performance, making it a top pick for investors. The company's revenue for the fiscal year 2022 reached an impressive $365.8 billion, driven by strong sales across its product lines, including the iPhone, Mac, and services. Apple's ability to generate substantial cash flow has allowed it to invest heavily in research and development, ensuring its continued dominance in the tech industry.

Market Trends

The market trends for Apple are highly favorable. The company is well-positioned to benefit from the growing demand for 5G technology, with its latest iPhone models supporting this next-generation network. Additionally, Apple's focus on services, such as Apple Music, Apple TV+, and iCloud, provides a steady stream of recurring revenue, reducing its reliance on hardware sales.

Investment Perspectives

From an investment perspective, Apple offers a balanced mix of growth and stability. The company's strong brand loyalty and ecosystem lock-in effect ensure a steady customer base. Moreover, Apple's commitment to returning capital to shareholders through dividends and share buybacks makes it an attractive option for income-focused investors.

Current Events

Recent developments have further solidified Apple's position in the market. The company has announced plans to enter the augmented reality (AR) and virtual reality (VR) space, which could open up new revenue streams. Additionally, Apple's focus on sustainability and environmental initiatives has resonated well with socially conscious investors.

Apple's strategic initiatives in AR/VR and sustainability are expected to drive long-term growth and enhance shareholder value.

Actionable Insights

For investors looking to capitalize on Apple's growth potential, consider the following actionable insights:

• Monitor the performance of Apple's AR/VR initiatives and their impact on revenue.
• Keep an eye on the adoption rate of 5G technology and its influence on iPhone sales.
• Evaluate the growth of Apple's services segment and its contribution to overall revenue.
• Consider the company's dividend yield and share buyback programs as part of your investment strategy.

In conclusion, Apple remains a compelling investment opportunity due to its strong financial performance, favorable market trends, and strategic initiatives aimed at future growth.

Celebrity Clothing Brand

Overview

Skims, founded by Kim Kardashian in 2019, is an innovative fashion brand that has quickly gained a reputation for its inclusive and body-positive approach to shapewear, loungewear, and intimates. The company's philosophy centers around providing comfortable, flattering solutions for all body types, emphasizing various sizes and shades to cater to diverse customers. Skims has distinguished itself in the fashion industry through its commitment to celebrating body diversity and prioritizing comfort without sacrificing style. Its product line extends beyond traditional shapewear to include items like bodysuits, bras, underwear, and loungewear, all designed with modern, minimalist aesthetics.

Financial Performance

Financially, Skims has shown promising signs of robust sales and revenue growth, indicating a profitable business model. The brand's innovative approach to shapewear, blending comfort with style, sets it apart in a competitive market. Investor excitement for the 2024 IPO is fueled by the brand's potential for sustained growth and success in the market. The shift in consumer preferences towards more inclusive fashion brands and Skims' strong e-commerce platform further underscores the brand's potential.

Market Strategy

Kardashian's marketing savvy has been a huge benefit to Skims. A critical part of its strategy is to rely on word-of-mouth buzz from social media influencers. But partnerships have been important for growth, too. For example, Skims has formed collaborations with Nordstrom (JWN) and the U.S. Olympics team. The brand has grown rapidly due to strategic social media marketing and celebrity endorsements, making it a standout in the contemporary apparel market.

The combination of strategic marketing, celebrity endorsements, and a strong e-commerce platform positions Skims as a potential leader in the evolving fashion industry.

Investment Insights

For investors exploring the rise of new companies on the stock market, Skims represents a compelling opportunity. The brand's success reflects a shift in consumer preferences towards inclusivity and authenticity in fashion. With its effective use of social media marketing and strong financial performance, Skims is well-positioned for a successful IPO. Investors should consider the brand's innovative approach, robust sales growth, and strategic partnerships when evaluating its potential.

Conclusion

In conclusion, Skims' commitment to inclusivity, strategic marketing, and strong financial performance make it a top pick for investors looking to capitalize on the evolving fashion industry. The brand's potential for sustained growth and success in the market fuels investor excitement for the 2024 IPO, positioning Skims as a potential leader in the contemporary apparel market.

Online Marketplace

Market Overview

The online marketplace sector has seen exponential growth over the past decade, driven by increasing internet penetration and the shift towards e-commerce. Investors are particularly interested in this sector due to its resilience and potential for high returns. The COVID-19 pandemic further accelerated this trend, making online marketplaces an essential part of the global economy.

Financial Performance

Many online marketplaces have reported strong financial performance, with significant year-over-year revenue growth. Key players in this sector often benefit from multiple revenue streams, including transaction fees, subscription services, and advertising. For instance, companies like Amazon and eBay have shown consistent profitability, making them attractive options for investors.

Market Trends

Several trends are shaping the future of online marketplaces:

• Mobile Commerce: Increasing use of smartphones for shopping.
• Personalization: Enhanced user experience through AI and machine learning.
• Sustainability: Growing consumer preference for eco-friendly products.
• Global Expansion: Companies are expanding their reach to emerging markets.

Investment Risks

While the sector offers lucrative opportunities, it is not without risks. Regulatory challenges, cybersecurity threats, and intense competition are some of the key risks that investors should consider. Additionally, market saturation in developed regions could limit growth prospects.

The online marketplace sector is a dynamic and evolving space, offering both opportunities and challenges for investors. Staying informed about market trends and financial performance is crucial for making sound investment decisions.

Actionable Insights

• Diversify: Consider investing in a mix of established players and emerging platforms.
• Stay Updated: Keep an eye on regulatory changes and market trends.
• Risk Management: Be aware of the risks and have a strategy in place to mitigate them.

Investing in online marketplaces can be a rewarding venture if approached with careful analysis and strategic planning.

Healthcare Billing Platform

Overview

Waystar Technologies is a leading player in the healthcare billing sector, operating a cloud-based platform that assists healthcare organizations in managing their payments. Formed in 2017 through the merger of Navicure and ZirMed, Waystar has quickly become a significant force in the industry.

Financial Performance

In 2019, the EQT VIII Fund and the Canada Pension Plan Investment Board acquired a majority equity stake in Waystar, valuing the company at $2.7 billion. The platform is robust, with about 100 customers managing more than $1 billion in annual payments. This strong financial foundation makes Waystar a compelling investment opportunity.

Market Trends

The healthcare billing market is experiencing rapid growth, driven by the increasing complexity of healthcare payments and the shift towards digital solutions. Waystar's cloud-based platform is well-positioned to capitalize on these trends, offering a scalable and efficient solution for healthcare organizations.

Investment Perspective

Investors should consider Waystar's strong market position and financial performance. The company's technology simplifies the payment process, making it easier for healthcare organizations to manage their finances. This makes Waystar a promising candidate for those looking to invest in the healthcare sector.

Current Events

Waystar recently announced a Series I round of funding, raising over $6.5 billion at a $50 billion valuation. This significant influx of capital underscores the company's growth potential and market confidence.

With the healthcare industry increasingly moving towards digital solutions, Waystar's platform is poised for continued success.

Actionable Insights

• Evaluate Waystar's financial performance and market position.
• Consider the company's recent funding round and its implications for future growth.
• Monitor market trends in healthcare billing and digital payment solutions.

Waystar Technologies offers a compelling investment opportunity in the healthcare billing sector, backed by strong financials and a robust market position.

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Conclusion

Investing in IPOs can be an exciting yet challenging endeavor. As the market heats up with new and promising companies like Instacart, Birkenstock, and Arm making their debuts, it's crucial to approach these opportunities with a well-informed strategy. While IPO stocks offer the potential for significant returns, they also come with higher risks compared to more established stocks. By leveraging tools such as the IBD Stock Checkup and staying updated with the latest market trends, investors can make more informed decisions. Remember, thorough research and a clear understanding of your risk tolerance are key to navigating the dynamic world of IPO investments successfully.

Frequently Asked Questions

What is an IPO?

An IPO, or Initial Public Offering, is the process through which a private company offers shares to the public for the first time. This allows the company to raise capital from public investors.

Is it a good idea to buy IPO stocks?

IPO stocks tend to be riskier than the broad stock market since these are new issues that investors are still evaluating. While some IPO stocks go on to be big winners, they often underperform the market due to the initial euphoria.

How can I invest in IPO stocks?

To invest in IPO stocks, you typically need to have an account with a brokerage that has access to the IPO market. You can place an order for the IPO shares through your broker.

What are some of the top IPOs to watch in 2024?

Some of the top IPOs to watch in 2024 include Instacart, Birkenstock, Arm, Stripe, Nvidia, Amazon, Apple, a celebrity clothing brand, an online marketplace, and a healthcare billing platform.

Why are IPO stocks considered riskier?

IPO stocks are considered riskier because they are new to the market and investors are still evaluating their potential. The stocks are searching for their equilibrium point, and there is often a lot of volatility in the early stages.

What factors should I consider before investing in an IPO?

Before investing in an IPO, consider factors such as the company's financial health, its business model, the industry it operates in, and the overall market conditions. It's also important to read the prospectus and understand the risks involved.