IPOs: 4 Stocks To Buy After The Plunge

The fall has been scary, but now there are some interesting values for investors

In just a few weeks, much of the air has come out of the IPO market. The damage has been particularly hard for the high-fliers, and some of the drops have been downright scary.
Despite all the trouble, might there be some juicy stocks to buy now?
I think so. For the most part, the plunge in IPOs doesn’t look like a repeat of the dot-com bust. Back then, many of the companies had minimal revenues and huge losses. So when the capital stopped flowing, it caused a flood of disaster for investors.
But this time around, most of the IPOs have solid fundamentals and nice growth opportunities. So then, which recent IPOs should you pick up off the floor? Here’s a look at four stocks to buy.

IPO Stocks to Buy #1: King Digital Entertainment (KING)

IPO Price: $22.50
High: $22.50
Current Price: Â $17.88
Among the four stocks to buy, King Digital Entertainment (KING[1]) is one of the few that never even had a chance to soar. If anything, it looks like the company’s offering marked the peak in the IPO market.
But KING stock certainly looks attractive now. The company is a top player in the fast-growing mobile gaming market. Of course, its main title is Candy Crush Saga, which has 97 million daily active users. But there are other strong grossing games like Bubble Witch Saga, Pet Rescue Saga and Farm Heroes.
True, Wall Street is worried about King’s dependence on Candy Crush Saga, which represents about 78% of bookings. But then again, KING stock is sitting at value levels. The price-to-earnings ratio is a mere 9X and this compares to the following in the industry:

Company	Ticker	Forward P/E Ratio
Activision Blizzard	ATVI	15
Electronic Arts	EA	18
Glu Mobile	GLUU	27
Zynga	ZNGA	80

But this week, King also announced an interesting deal that could boost the stock. The company has teamed up[2] with Tencent to launch Candy Crush Saga in China. It will be rolled out across Mobile QQ and WeChat, which has over 225 million active users.

IPO Stocks to Buy #2: Veeva Systems (VEEV)

IPO Price: $20
High: $49
Current Price:  $22.09
When talking about IPO stocks to buy, it’s almost a given that there will be a cloud operator. And Veeva Systems (VEEV[3]) is one of the best buys out there.
The company has a platform that helps life sciences companies, like Eli Lilly (LLY[4]), Gilead Sciences (GILD[5]) and Merck (MRK[6]), to help with customer relationship management (CRM) a well as document/data storage. The platform helps these companies meet their rigorous compliance requirements.
In fiscal 2014, revenues came to $210.2 million, up 62% from the prior year, and the company posted a profit of $23.6 million. In all, Veeva has 198 customers. Yet the opportunity for VEEV stock still seems to be in the very early stages. According to its IPO filing[7], the company believes that the market opportunity is roughly $5 billion.

IPO Stocks to Buy #3: Care.com (CRCM)

IPO Price: $17
High: $29.25
Current Price: Â $11.49
CRCM has been on a roller coaster ride. The company launched its IPO in late January as stock shot up about 42%. But it turned out to be short-lived. As of now, CRCM stock is well below the IPO price.
Despite the fall, CRCM stock still deserves to be on the list of IPO stocks to buy. The company operates an online marketplace for caregivers, which has about 9.7 million members. All in all, growth has been robust. From 2010 to 2012, revenues soared from $12.9 million to $48.5 million. As for the first nine months of 2013, revenues spiked by 81% to $32.6 million.
But CRCM is targeting a massive market opportunity. No doubt, the demographics are extremely favorable as the U.S. population is getting older. More importantly, there are about 42 million households that have enough income to afford caregiver services.
The valuation of CRCM stock is also reasonable, at about 4.4 times sales. This compares to much loftier multiples for other online marketplace operators, such as Zillow (Z[8]), whose price-to-sales ratio is about 16.

IPO Stocks to Buy #4: Tandem Diabetes Care (TNDM)

IPO Price: $15
High: $30.25
Current Price:  $16.93
As seen with companies like BlackBerry (BBRY[9]), the device mobile market can be brutal. But there are actually some compelling opportunities in niches, especially in healthcare. And this is certainly the case with Tandem Diabetes Care, which looks pretty solid among the four IPO stocks to buy.
The company develops t:slim, which is an insulin device that looks like an Apple (AAPL[10]) iPhone. It has a miniaturized pumping mechanism that draws insulin from a flexible bag within the pump’s cartridge rather than relying on a syringe and plunger mechanism. The device can easily fit in a pocket, and features a high-resolution, color touchscreen. Keep in mind that traditional devices are much bulkier and complicated (which can mean dangerous mistakes).
Last year, revenues hit $29 million, up from $2.5 million. For 2014, the company projects revenues of $48 million to $54 million. And growth should continue for the long haul. After all, about 6 million people in the US are insulin-dependent and require daily treatments.

By Tom Taulli 
Source: investorplace.com