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3 Appealing IPOs For Your Buy List

Published 08/24/2021, 05:17 AM
Updated 09/29/2021, 03:25 AM

With no shortage of fresh companies for investors to choose from in 2021 thanks to a burst of IPO activity, it can be difficult to keep track of the sheer amount of newly public companies to consider investing in. During Q2, global IPO volumes rose 150% and proceeds rose by 215% year-over-year to deliver the best performing second quarter for the IPO market in 20 years. The market is clearly flush with new businesses that are looking to take advantage of massive liquidity in the financial system and an equity market that shows no signs of slowing down. All of this adds up to plenty of appealing new IPOs to consider purchasing.

It’s important for investors to highly scrutinize each new company that goes public, as a lot of these stocks will not deliver the type of returns that are expected. There’s also the fact that newly public companies don’t have a lot of trading history for investors to base their decisions on, making IPO investing somewhat of a risky endeavor. With that said, there are quite a few appealing IPOs that stand out as potential buys at this time. We’ve put together a list of 3 of them below, let’s take a further look at what sets these stocks apart.

1. Confluent

There are certainly plenty of tech IPOs to choose from in 2021, which is likely a byproduct of strength in the sector and trends like the digital transformations that are occurring throughout the business world. One name worth looking at is Confluent (NASDAQ:CFLT), a big-data company that has developed a platform helping enterprises stream data and distribute it to the systems that need to use it. Most companies today have an endless amount of data generated from user interactions, and it can be difficult to store and manage it all. It’s also important to be able to move that data around in order to actually use it effectively. That’s where Confluent comes into play.

The company’s platform is designed to have real-time data from multiple sources streamed across an enterprise for real-time analysis and enables organizations to deploy product-ready applications that run across cloud infrastructures and data centers. Confluent was spun off from LinkedIn and its platform has been used by companies like Intel (NASDAQ:INTC), Expedia (NASDAQ:EXPE), Lowe’s (NYSE:LOW), Humana (NYSE:HUM), and more. It’s clear that the platform can help companies in all different types of industries, and with Confluent's Q2 total revenue of $88 million, up 64% year-over-year, along with 617 customers with $100,000 or greater in ARR in Q2, up 51% year-over-year, this is certainly an IPO stock to consider adding to your shopping list.

2. The Beauty Health Company

Next, we have a company that went public last year and is focused on bringing new and innovative beauty products to market. The Beauty Health Co's (NASDAQ:SKIN) top brand, HydraFacial, is a non-invasive and approachable beauty health platform and ecosystem with a powerful community of estheticians, consumers, and partners, bridging medical and consumer retail to democratize and personalize skincare solutions for the masses. The HydraFacial system stands out as it addresses two of the main causes of skin issues, deep-set impurities and damaged skin cells, in a quick 30-minute in-office procedure. It’s also worth mentioning that the company can grow across several different sales channels, including the spa service market, aesthetics, and beauty retail market.

The Beauty Health Company's products are already available in over 87 countries with approximately 18,000 delivery systems, and what’s nice about the skincare market is that it’s appealing to people all over the world. The company also delivered record Q2 earnings results including net sales of $66.5 million, up 371.2% year-over-year, and gross margin that increased to 71% versus 30.3% in Q2 2020. Finally, the fact that the company also raised its full-year 2021 sales guidance certainly makes it an interesting recent IPO to consider adding.

3. Weber Inc

Although this well-known grill maker ended up pricing its shares below their initial expected range when it debuted earlier this month, investors in Weber Inc (NYSE:WEBR) should still consider adding the stock to their watch lists for potential exposure to this market-leading company. Weber is essentially the most trusted name in outdoor cooking products with 24% of the total market share in the world and has developed a brand with millions of loyal advocates. As people were focused on staying home during the pandemic, Weber saw its revenue increase by 18% year-over-year to $1.53 billion in 2020, and the company has consistently delivered steady revenue growth for decades.

Weber offers products like gas grills, charcoal grills, wood pellet grills, electric grills, smokers, and even smart grills that should deliver strong sales this summer, and the company’s direct-to-consumer and e-commerce sales channels are a major strength. The company is also cooking up some intriguing technology such as Weber Connect, which is a step-by-step grilling assistant that turns any grill into a smart grill. The bottom line is that Weber is an appetizing IPO that could be a winner this summer, so keep an eye on how it trades going forward.

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