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4 2020 IPOs Ready to Roar



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 8 months ago '20        #1
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xxcannonxx  topics gone triple plat - Number 1 spot x31
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4 2020 IPOs Ready to Roar
 

 
A slew of IPOs have hit markets this year and we have some ideas on four that are growing fast with positive industry tailwinds


Despite the impact of the novel coronavirus pandemic on financial markets in the first half of 2020, the depths of March did not discouraged companies from initial public offerings. As of Nov. 18, 2020, there have been 377 IPOs on U.S. markets, some 76.2% more than last year.

Quite a few of the newly listed companies have presented attractive investment opportunities. I have narrowed down and focused on four names that went public this year. I believe that these IPOs are ready to roar on the back of strong top-line and earnings growth.

Let’s take a deeper look into these new investment opportunities.

Li Auto (NASDAQ:LI) $38.24

iHuman (NYSE:IH) $25.80

Vital Farms (NASDAQ:VITL) $29.76

Lordstown Motors (NASDAQ:RIDE) $26.40

2020 IPOs Ready to Roar: Li Auto (LI)
Among the IPOs of FY2020, Li Auto’s offering is probably the most exciting. As I write about this electric vehicle maker in China, it’s worth noting that Nio (NYSE:NIO) stock has skyrocketed by 1,280% in past six months. LI stock, which listed at $11.50 has already surged by more than 120% after closing on its debut at $16. However, I believe that the best part of the rally is still to come.

Recently, the company reported its first quarterly numbers. Vehicle deliveries for the third quarter of 2020 were 8,660, a 31% increase on a quarter-on-quarter basis. Vehicle deliveries have steadily increased since the first model was launched in November 2019.

Further, for Q4 2020, the company expects to deliver 11,000 to 12,000 vehicles. Once the economy gains further traction, I expect stronger numbers. Another important point to note is that the company reported free cash flow of 750 million CNY ($114.1 million) for the quarter; Nio was struggling for cash earlier this year. Li Auto has strong operational efficiencies and as FCF swells, the stock is likely to trend higher.

Li Auto has also formed a strategic partnership with Nvidia (NASDAQ:NVDA). The partnership will work in the areas of premium smart SUVs (to be launched in FY2022) and autonomous driving.

The company is also expanding its footprint across China. With focus on innovation-driven growth and the success of the company’s first EV, I am bullish on LI stock.

iHuman (IH)
Screen shot of characters from iHuman website
Source: iHuman
IH stock debuted in its Oct. 9 IPO and the shares are worth holding for gains in the coming quarters. If you haven’t heard of it, iHuman is a leading childhood edutainment company in China. With the novel coronavirus pandemic, the business of edutainment has gained traction and iHuman stands to benefit from the tailwinds in the coming years.

In terms of growth, iHuman reported monthly active users (MAUs) at 10.3 million as of June 2020. For the prior year comparable period, MAUs were 3.2 million. In addition, the number of paid users increased to 1.4 million as compared to 0.4 million for the period in comparison. This implies a 250% YoY growth. Clearly, the company is on a high growth trajectory. As paid users increase, cash flow will swell.

The total revenue of complementary childhood education market in China is expected to increase to 1,337.7 billion yuan in FY2024 from 592.5 billion yuan in the current year. Given this growth outlook, iHuman will continue to benefit.

In the coming quarters, if the company’s MAU and paid user growth is strong, I expect IH stock to surge.

Vital Farms (VITL)
VITL1600
Source: Vital Farms
VITL stock is another name among the IPOs of FY2020 that’s worth considering. Vital Farms identifies itself as an ethical food company. The company sells pasture-raised products in the U.S., which includes eggs, butter, hard-boiled eggs and ghee, clarified butter that is popular in South Asian households and has gained in American kitchens in recent years.

It is a Certified B Corporation, a business that balances “purpose and profit” and is legally obligated to measure the impact of business strategy and decisions on its workers.

The first reason to be bullish on VITL stock is the growth momentum. For Q3 2020, the company reported revenue of $53.4 million, which represents a y-o-y growth of 57%. For the same period, the company’s EBITDA growth was 101%.

An expanding product category and product penetration is another reason to be bullish. As SKUs expand, the company’s top-line growth is likely to accelerate. Most of the company’s products are available with top retail partners that include Target (NYSE:TGT), Kroger (NYSE:KR), Whole Foods and Sprouts Farmers Market (NASDAQ:SFM).

The fact that Vital Foods has developed an ethical alternative to factory farming practices is another reason to be bullish. Consumers are increasingly likely to adopt Vital’s products as compared to factory egg brands. The company’s household penetration has increased to 3.6% in Q3 2020 as compared to 2.2% in Q3 2019.

Lordstown Motors (RIDE)
Image of a map showing Lordstown's location.
Source: SevenMaps/sh*tterStock.com
There have been several SPAC listings in the current year. RIDE stock is among the attractive listings. Lordstown Motors’ stock has been volatile since listing in mid August.

After surging to a high of $31.80, RIDE stock corrected to $13. Another rally has taken the stock near previous highs. I believe that Lordstown Motors has an attractive business outlook. The stock is likely to make new highs.

As an overview, Lordstown Motors designs and manufactures electric vehicles. The company’s first pick-up truck will hit the markets towards the end of next year. A key reason to be bullish on the company is on its targeting of commercial fleets, still a nascent EV market as compared to consumer vehicles.

The company has already received 40,000 pre-orders for its pick-up. Further, vehicle production is targeted at 31,600 units for FY2022. By FY2024, the company expects to increase production to 107,000 units. If the order inflow remains strong, the positive momentum for the stock will sustain.

The recent listing has provided the company with $675 million to fund growth. With minimal capital expenditure, I don’t see prospects for further dilution. This is another positive for RIDE stock.

On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.

visit this link https://investorplace.com .. ready-to-roar/
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14 comments
 

 8 months ago '20        #2
xxcannonxx  topics gone triple plat - Number 1 spot x31 OP
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Last edited by xxcannonxx; 11-24-2020 at 02:41 PM..
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 8 months ago '12        #3
Superstarbrown7  topics gone triple plat - Number 1 spot x1
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Yeah I have RIDE on my watchlist
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 8 months ago '15        #4
Johnny Cinco 
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 xxcannonxx said
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add me bro bro
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 8 months ago '16        #5
Illogic 
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Love new ipos
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 8 months ago '20        #6
xxcannonxx  topics gone triple plat - Number 1 spot x31 OP
Props total: 43386 43 K  Slaps total: 1722 1 K
 Illogic said
Love new ipos

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 8 months ago '18        #7
Raymon 
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I was reading an article 2 days ago about IPOs that are coming like grubhub, in it they talked about a Game or something called Roblox, today I talked to my 8 year old nephew and he told me to download it to play with him over any device.... So I concluded I'm definitely investing in roblox w/e it is cause it has the attention of alot of children's and the way he talked to me about it, seems like it might be as big as fortnite or minecraft idk
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 8 months ago '08        #8
DJHoove 
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add me please

 xxcannonxx said
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 8 months ago '19        #9
Capitalgain 
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 Raymon said
I was reading an article 2 days ago about IPOs that are coming like grubhub, in it they talked about a Game or something called Roblox, today I talked to my 8 year old nephew and he told me to download it to play with him over any device.... So I concluded I'm definitely investing in roblox w/e it is cause it has the attention of alot of children's and the way he talked to me about it, seems like it might be as big as fortnite or minecraft idk
My man, Roblox is big sh1t, do tha knowledge. My daughter put me on while I been working from home. Kids be doing YouTube videos and everything on tha sh1t.
Imma def check for their stock though once it comes out.
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 8 months ago '18        #10
Raymon 
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 Capitalgain said
My man, Roblox is big sh1t, do tha knowledge. My daughter put me on while I been working from home. Kids be doing YouTube videos and everything on tha sh1t.
Imma def check for their stock though once it comes out.
Yeah I learned there's roblox youtubers too haha they had some great numbers since covid and stay at home orders but their numbers were increasing before then covid just helped them alot, something like 250 million is cash, some good IPOs coming out this year look intoo C3.ai some artificial intelligence software base it's low-key making Billions on revenue and it's also file to go public this year.
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 8 months ago '10        #11
Thegreens 
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Add me player. Thanks
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 8 months ago '05        #12
arkansas@$$hole  topics gone triple plat - Number 1 spot x1
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Thanks. Had 2 of 4
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 8 months ago '09        #13
Acruzer 
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That iHuman one could be interesting

Education is a huge business
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 2 months ago '11        #14
Sin  topics gone triple plat - Number 1 spot x35
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damn, I hope none of you bought at these highs
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 2 months ago '05        #15
SoReal 
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Please add me to this.



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