This year has been a busy year for IPO’s. If there is one thing we’ve learned it’s that rushing in to buy an IPO on the first day, or even within the first few days, isn’t always the smartest thing to do, even when the underlying company is fundamentally sound. Three of the latest IPO’s are no different. Price action since the opening trade has been volatile leaving many to wonder what will happen next. With the quiet period ending on these stocks and the analysts starting to speak out, we think it is time to start buying them, if cautiously.
1. Arteris
Arteris (NASDAQ:AIP) is a very unique player in the semiconductor industry providing tools and services for NoC and SoC development. Network on a Chip (NoC), and System on a Chip (SoC), are advanced solid-state semiconductor applications being developed for most industries including OEM automotive manufacturers, IoT and edge computing, and AI. The stock has seen some of the most bullish activity since the opening trade but is still volatile. Based on the action, however, it looks like the trend is up and that is supported by the analysts.
Five analysts have come out so far, initiating the stock at a firm buy. Among them are Jefferies and Rosenblatt Securities which holds the high price target of $35. The Marketbeat.com consensus price target is just shy of $30 and implies and about 48% of the upside. Based on our view of tech, the semiconductor industry, and market conditions, we think Arteris services will be in high demand over the next few years at least. Shares of the stock are pulling back from the fresh all-time high and showing support at the $20 level.
2. Solo Brands
Solo Brands (NYSE:DTC) is an interesting investment in both outdoor lifestyle and eCommerce. The company is a DTC-specific retailer of outdoor products including stoves and grills, kayaks and canoes, and apparel operating several websites under the Solo umbrella. The company made a small amount of buzz during the IPO having opened well above the expected price but the action has not been bullish since. With price action down more than 20% from the open, there is a risk of further decline but support is starting to show itself.
Six analysts have announced coverage of Solo Brands and set the initial Marketbeat.com consensus at a firm Buy. The consensus price target is near $26 and implies about 50% of the upside. Analysts rating the stock include BoA, Citigroup, JP Morgan, and Jefferies which hold the high price target of $30. In JP Morgan’s view, there are three reasons to buy the stock including brand momentum, structural advantages from being 84% DTC, and numerous long-term opportunities including product innovation, supply chain advantages, and international expansion.
3. Fluence Energy
Fluence Energy (NASDAQ:FLNC) specializes in energy storage solutions for business and industry but, to put it simply, it makes very large batteries for storing power from renewable sources. As such, it is fundamental to the alternative energy revolution and well-positioned for expansive growth. Price action in this stock has been equally volatile in the post-IPO period but trending higher in the near term at least. Based on our assessment of the alternative energy market and the analyst’s activity, we think this stock will be trending higher in the mid and long-term as well.
A full ten analysts have initiated coverage on this stock including every name mentioned so far as well as Citigroup, Credit Suisse, and Barclay’s. The Marketbeat.com consensus rating is a buy leaning toward hold with two of the ten rating the stock a Hold or Neutral. In our view, initiating at Hold or Neutral is as good as a Buy and maybe better because it leaves more room open for upgrades. Regardless, the $45 consensus price target implies 20% of upside while the high price target of $50, held by Credit Suisse, implies a more robust 62% of upside.
