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The financial markets had a rough year, but don’t tell that to these hot IPOs.
Even if you’re the first one to do it, picking a good stock can be very profitable. Titanium Metals, for example, has been a public company since 1996, but investors who took the plunge in 2003, when the stock was trading at around $0.50 (split adjusted), are up, well, let’s just say a lot.
The same thing goes for Google. Last year at this time, investors who bought the stock are up more than 25%. But investors who bought into Google at its IPO price of $100 in 2004 are now sitting on a gain of more than 700%.
Since the dot-com era, the appeal of buying an IPO has gone down a bit, but there’s still something special about getting in on a great stock at the beginning. IPOs can be hard to invest in, though, because there is usually less information about the company and, unless a bank outside of the underwriting team decides to cover the stock, there are no analyst estimates to use.
The Motley Fool’s investing community, CAPS, is helping to make new stocks clear by letting investors share their thoughts and predictions for more than 5,000 stocks, including recent IPOs. Here is a look back at some of the best IPOs of 2007:
| STOCK | RETURN SINCE IPO | TOTAL CAPS RATINGS | CAPS BULLS | CAPS RATING |
|---|---|---|---|---|
| JA Solar Holdings (NASDAQ: JASO) | 360% | 521 | 471 | *** |
| MercadoLibre (NASDAQ:MELI) | 338% | 272 | 256 | **** |
| Yingli Green Energy (NYSE: YGE) | 249% | 469 | 445 | **** |
| FCStone Group | 191% | 168 | 162 | **** |
| VMware (NYSE: VMW) | 188% | 1,081 | 960 | *** |
As of December 28, IPOHome, Yahoo! Finance, and CAPS were used as sources. The IPO price is used to figure out the returns.
Before you head over to CAPS to see what CAPS players have to say about these offers, you might want to check out this page. A few things come to mind when I think about Yingli Green Energy:
Sunny days for solar
It’s not hard to see that the stock market has had a great year. With rising oil prices acting as a tailwind, solar stocks have crushed the rest of the market and even made the stock of some Greek dry bulk shippers (you know who I’m talking about!) look slow. Aside from IPOs, First Solar (NASDAQ: FSLR) and Ascent Solar (NASDAQ: ASTI) both went up by more than 800% this year and Hoku Scientific went up by almost 350%. Not to be outdone, both SunPower (NYSE: SUN) and Rule Breakers’ favorite Suntech Power (NYSE: STP) went up by 252% and 144%, respectively, to keep up.
JA Solar and Yingli Green must have been on the same party bus since they both tripled and even quadrupled the money of their investors. But what about solar this year made it more interesting than a date with Scarlett Johansson? Since some of these stocks are now trading at earnings multiples of more than 100, part of the answer is that there is a lot of speculation going on. A lot of this guessing is based on the idea that solar power will be a big part of making cleaner electricity in the future.
Yingli Green has gotten one of the best ratings in the solar group on CAPS. Annmarie, a CAPS All-Star, says that the stock is “one of the most solid solar plays” and points out that many insiders own it and that the company has a “vertically integrated manufacturing process.” AnomaLee goes on to say about the solar industry as a whole, “Wall Street and I both know that the sun is the best source of energy for our planet. If you think the solar energy industry is hot now, just wait until the richest country in the world really gets on board.”
Even though I like solar power, I wouldn’t be surprised if many people who try to invest in publicly traded solar companies lose their money. In many new, cutting-edge industries, excitement tends to grow faster than the industry’s real short-term prospects. The Internet bubble of 2000 is a good example of this theory in action. Also, the markets usually see a whole army of companies trying to get into these kinds of hot markets. Some of these companies will do well, but many will struggle or even fail as the market gets more crowded and new companies with better technology come in. So, even though the future of solar power may look bright, it’s important to be very picky when trying to chase the hot (and getting hotter) solar stocks out there.
Not what do you think? Go to CAPS and tell other people what you think about the screaming solar stocks. While you’re there, you can see what more than 79,000 people have to say about more than 5,000 stocks.
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