The global IPO market hit record highs in the first half of 2021. This trend is likely to continue given the favorable market environment. For investors looking to invest in newly listed companies with lower risk profiles, we think the shares of the two companies spun off by United Technologies—Carrier Global (NYSE:CARR) and Otis (OTIS)—could be solid choices. Let’s discuss.The bullish equity markets and favorable investor sentiment have incentivized several private companies to go public over the past couple of months. The low-cost alternatives to traditional IPOs, such as direct listings and SPACs, have also boosted stock market debuts over the past year. As of June 15, initial public offerings in the United States raised $171 billion, surpassing 2020’s $168 billion.
The average one-day return for U.S. IPOs through June 30, 2021 was 40.5% versus 28.2% during the same period in 2020. Global IPO proceeds reached 20-year highs in the first quarter of 2021. Global IPO volumes have increased 85% year-over-year, with proceeds increasing 271% year-over-year.
However, investors should consider a company’s financials and growth prospects before investing in its freshly traded shares. With this in mind, we think fundamentally sound companies Carrier Global Corporation (CARR) and Otis Worldwide Corporation (NYSE:OTIS), which were spun off from renowned United Technologies Corporation (NYSE:RTX), could be good additions to one's portfolio.