2 Recent IPO Stocks with Upside
The IPO market was red hot throughout 2020 thanks to historically low-interest rates and a big rally off of the March lows. While the momentum has slowed a bit this year, there are still plenty of exciting new companies making their public debuts to choose from
It’s always exciting to see a company make its public debut, especially when it’s a business that you think has real potential. The IPO process is a big part of what makes investing and financial markets so intriguing, as it allows growing businesses to raise capital and provides a way for people to potentially profit off of a company’s unique vision. However, investors need to understand that not all IPOs end up being winners. These types of stocks can be extremely volatile and tricky during their first few weeks of trading, which is why it's so important to dive deep into a company’s business model, earnings, and competitive advantages before adding shares.
The IPO market was red hot throughout 2020 thanks to historically low interest rates and a big rally off of the March lows. While the momentum has slowed a bit this year, there are still plenty of exciting new companies making their public debuts to choose from. Here are 2 recent IPO stocks with upside to consider adding in the coming weeks.
First up is UiPath, a fascinating technology company that went public back in April. Uipath offers an end-to-end platform for automation, which might seem similar to a lot of the other high-growth cloud software stock winners from last year. However, what sets UiPath apart is how the company uses artificial intelligence to help organizations complete their office tasks. The company’s software is designed to transform the way that humans do work, and it uses robotic process automation technology to handle some of the most repetitive and routine tasks that are essential for organizations around the world.
Many companies outsource jobs like data entry and processing tasks to lower-wage countries such as India, but with UiPath they can simply rely on the software to handle the job. When you consider all of the industries that can benefit from this type of platform, it’s easy to recognize the potential here. The company already serves industries such as business process outsourcing, finance and banking, insurance, telecom, healthcare, manufacturing, retail, public sector, and business process automation.
Another thing worth noting about UiPath stock is that it’s one of the only recent high-profile IPOs that is currently trading above its opening day price. The company saw its revenues surge by 81% year-over-year in 2020 to $607.6 million and has one of the highest gross margins in the software space. Although there are plenty of cloud software companies to choose from, UiPath is one that really stands out and is certainly a recent IPO with upside potential.
Hayward Holdings Inc (NYSE:HAYW)
Next, we have Hayward Holdings Inc, a recent IPO stock that offers investors a way to take advantage of the trend in homeowners spending big on upgrading their houses. Hayward is a global designer, manufacturer, and marketer of a broad portfolio of pool equipment and associated automation systems. The company’s engineered products feature various energy-efficient and environmentally sustainable offerings and help homeowners create a truly unique and memorable outdoor living experience. Examples of this company’s products include a broad line of internet of things enabled controls, alternate natural sanitizers that help to lower chemical usage, energy-efficient pumps, light-emitting diode lights, heaters, automatic cleaners, and pumps and filters.
Hayward manufactures and sells a full line of residential and commercial swimming pool equipment and supplies in the U.S. and in Europe, Central America, South America, the Middle East, Australia, and other Asia Pacific countries. It’s already an industry leader and has been a very impressive stock since debuting back in March. Hayward Holdings is up over 43% since it went public and seems poised for more upside, especially since housing and construction activity remains strong.
The company recently reported its Q1 earnings that confirm homeowner demand is driving growth. Net sales increased by 96% year-over-year to $344.4 million and the company reported a positive net income of $36.9 million, which is very uncommon for a company that recently went public. Finally, Adjusted EBITDA increased 200% year-over-year to $107.3 million and the company expects net sales growth of 40 to 45% year-over-year in 2021. The bottom line here is that Hayward Holdings is the perfect example of a recent IPO that investors can be confident in buying thanks to the fact that its already reporting profits and should benefit from sustained market demand throughout the year.
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