Vox Screens Stocks: John & Justin pick two stocks from recent IPOs
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In this episode of Vox Screens Stocks: John & Justin pick two stocks from recent IPO's
There are lots of ways of finding investment opportunities, but one of the most fruitful is to start your search by crunching stock market data. With thousands of listed companies, using tools to filter for certain financial characteristics can whittle the market down to a manageable number that you can use to focus your research efforts.
Each week we'll use a variety of stock screening approaches to come up with a list of stocks which fit the criteria of this week’s stock screener, then John & Justin will pick a stock from the list, explain what they like about it.
This week we are filtering for companies that have recently IPO'd, without any other screening criteria. The idea is simply to see how well companies have done since coming to market, and the results aren't pretty:
Beginning our screen at the start of 2021, we can see that 163 companies have floated. Of these, 37 have seen their shares risen with an average performance of +93.2% since flotation. And 122 have seen their shares fall, with an average performance of -47.2% since flotation. The overall average performance was -14.2% since IPO.
Notably, fewer than a third of companies that have IPOed since the start of 2021 are expected to deliver profits in the next forecast full year period.
The best performer has been (), a South African producer of thermal coal, which like many resources producer has benefited from the sharp rise in commodity prices this year. Its shares are up 1260% since IPO.
At the other end of the scale, sits (), down 98.6% since floating in January 2021 as a result of political disruption in Sri Lanka where its mines are located. Other members of the 95% club include Made.com (), () and (), reflecting the increasingly tough outlook for consumer stocks and transience of Covid shopping trends, and subsequent retreat from the heady valuations of online retailers, and the transience of Covid shopping trends.
IPO activity has also slowed sharply in 2022. So far this year, 39 companies have come to market, versus 79 in the same period in 2021.
John's Pick is:
Dr. Martens is an iconic British brand founded in 1960 in Northamptonshire. Originally produced for workers looking for tough, durable boots, the brand was quickly adopted by diverse youth subcultures and associated musical movements. Dr. Martens has since transcended its working-class roots while still celebrating its proud heritage and, six decades later, "Docs" or "DMs" are worn by people around the world who use them as a symbol of empowerment and their own individual attitude.
Dr Martens' shares have lost obver 40% of their value since coming to market, even after a recent recovery on better than expected trading news at the start of June on stronger direct-to-consumer sales. Risks of a consumer slowdown still hang over the business, but a forecast PE of just 13x reflects that, and offers a far greater margin of safety for would be buyers than the 40x at which its shares traded before the inflationary bear market kicked in. It's hard to imagine that such a lowly valuation for this iconic brand wouldn't have attracted the attention of would be buyers.
Justin's Pick is:
Saietta is an AIM-quoted, multi-national business which designs, engineers and manufactures complete Light-duty and Heavy-duty e-drive systems for electric vehicles on land from scooters to buses (Vehicle categories L, M, N and T) as well as marine applications.
Saietta has engineered breakthrough electric motor technology including proprietary AFT (Axial Flux Technology) and RFT (Radial Flux Technology) which can be combined with in-house power electronics, powertrain controls, mechanical axles and transmissions. The designs are unique and modular, delivering both high and low voltage electric drive solutions.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.