IPOs with Fair Prices and Bright Prospects: Is It Possible?
Over time, there have been various scandals concerning companies going public with the potential to improve significantly. As a result of these companies’ potential, track record and the management of their accounts before their releases, the potential success of these enterprises in their issuances causes them to be in high demand. Consequently, these shares are several times oversubscribed, leading to higher prices during their releases. Some of these companies, however, end up not making much of an improvement in the stock market. Further, some firms show great strides immediately after going public. However, after some time, their stock’s value lowers to points that are even below their issuance prices, thereby causing losses to investors. However, some offerings are oases in the deserts of overpricing. These companies have prices that are fair as compared to their valuations. What’s more, they are highly expected to increase in value over time. Here are the companies.
- Valvoline Inc.
This company has been in business for 151 years. It produces motor oil as well as lubricants for the automotive industry. The fact that this brand’s oil is extremely popular amongst car owners has been one of the key factors to this company’s growth. Additionally, its clear-cut organization into three divisions improves its supply chain. As such, the company has been able to manage its 1000 franchised oil service stations consistently. Further, Valvoline provides car repair and maintenance services to its clientele.
The firm’s revenue for the fiscal year 2016 increased by $77 million over the past two years from $196 million in 2015 to $273 million last year. Additionally, Valvoline’s sales growth in its franchises and private stores has grown over the past two years by 6 percent and 8 percent respectively. Currently, the stock’s trading has been pegged at 20x earnings.
- Invitation Homes Inc.
As a leading firm in the real-estate sector, prospects concerning the fate of this company show a steady growth trajectory. The company went public earlier this year with an issuance price of $20. This property holdings enterprise is currently being traded on the New York Securities Exchange under the ticker INVH. The company holds 50,000 properties across 13 states. Last year, the firm was valued at $6.75 billion. Despite its recent report showing the company was in debt, it is expected that its financial results for the first quarter of this fiscal year will show a breakeven on returns.
The issue of lack of housing in the United States at this time is only expected to increase. From this point, rental costs have gone off the charts. In Los Angeles, specifically, rental prices are expected to rise by over 5 percent over the next year. Invitation Homes has a $2 billion equity in the Los Angeles real estate market. The value of these properties is expected to rise by 5 to 8 percent. As such, the price during its initial offering will make up for the increase in price.
- Camping World Holdings
This company provides services for RV owners. As such, it deals in a unique market which enables them to tap consistent profits. Currently, the firm provides its services in 122 locations in 36 states. From 2012 to 2016, the company has raised its revenue from $1.85 billion to $3.53 billion. The presence of this firm’s market on the internet has led to the increased use of its services. Retiring baby boomers have also boosted the company’s services.