This year resembles 1999 in terms of technology initial public offerings that make little or no money coming out and rocketing higher. However, some of the glow has worn off, and some of the deals retreated to much lower price levels or traded lower right out of the chute. It was reported that some of the top hedge funds were shorting the IPOs as soon as they could, and now it appears that many of the same hedge funds could be piling into the shares.
We screened our 24/7 Wall St. research database looking for backdraft trade ideas on some of the companies that have had wild price swings in 2020. We found four companies that are rated Buy across Wall Street and also offer stellar technologies and applications. While not suited for conservative investors, these recent IPOs make sense for aggressive investors looking for solid ideas.
While all four are rated Buy at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
For anybody big into esports and gaming, this company is very familiar. Corsair Gaming Inc. (NYSE: CRSR) designs, markets and distributes gaming and streaming peripherals, components and systems in the Americas, Europe, the Middle East and the Asia Pacific.
The company offers gamer and creator peripherals, including gaming keyboards, mice, headsets, and controllers, as well as capture cards, studio accessories and others. It also provides gaming components and systems comprising power supply units, cooling solutions, computer cases and DRAM modules, as well as pre-built and custom-built gaming PCs, and others. Its PC gaming software comprises iCUE for gamers and Elgato’s streaming suite for content creators.
The company sells its products through a network of distributors and retailers, including online retailers, as well as directly to consumers through its websites. With the holiday right around the corner, this could be a solid idea.
D.A. Davidson has a $33 price target on the shares, while the Wall Street consensus target price is $31.56. The shares traded early Tuesday at $30.60 apiece.
Wall Street started coverage on this company Monday and shares backed off some. Datto Holdings Inc. (NYSE: MSP) provides cloud-based software and technology solutions for delivery through the managed service provider (MSP) channel to small and medium businesses in the United States and internationally.
Its Unified Continuity products include the following:
- Business Continuity and Disaster Recovery, which protects servers and workstations and minimizes downtime
- Cloud Continuity, an image-based continuity solution for Windows-based laptops and desktops
- SaaS Protection, an automated and secure backup and restoration product
- Workplace, a cloud-hosted file sync and share solution that enables end-users to synchronize files across platforms, including mobile devices
- File Protection, an MSP-managed secure and scalable backup product that enables MSPs to protect and recover files and folders on workstations and laptops
Datto networking products include access points, switches, edge routers and managed power devices. Its business management products consist of Autotask Professional Services Automation, an IT business management product, and remote monitoring and management.
The RBC price target is $39, and the consensus is still being set due to the recent coverage initiations. The stock traded at $30.10 on Tuesday morning.
This company was a blast from the past as it hit the IPO market after being spun out from private equity. McAfee Inc. (NASDAQ: MCFE) provides various integrated security, privacy and trust solutions to consumers, small and medium-sized businesses, large enterprises and governments in the United States and internationally.
The company operates in two segments, Consumer and Enterprise. Its security technologies enable home users and businesses to stay ahead of the wave of file-less attacks, viruses, malware and other online threats. The company offers personal protection services that provide holistic digital protection of the individual and family wherever they go under the Total Protection and LiveSafe brands, as well as integrated and open platform for heterogeneous, multi-cloud and on-premise environments.
McAfee also provides device security, online privacy and comprehensive Internet security, and identity protection services, as well as MVISION Device, MVISION Cloud and MVISION security services.
Goldman Sachs started coverage with a $26 target, and no consensus figure was available. McAfee was trading at $17.85 per share.
This company came public as a direct listing and struggled out of the gate, but it seems to be taking off now. Palantir Technologies Inc. (NASDAQ: PLTR) builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations.
The company offers Palantir Gotham, a software platform for government operatives in the defense and intelligence sectors, which enables users to identify patterns hidden deep within datasets, ranging from signals to intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform.
The company also provides Palantir Foundry, a platform that transforms the ways organizations operate by creating a central operating system for their data, and it allows individual users to integrate and analyze the data they need in one place.
The $18 Jefferies price target on Palantir Technologies compares with a consensus target of $14 and the recent share price of $16.80.
All these stocks still offer aggressive investors outstanding entry levels, but it should be noted that none have seen their lockup period come and go. In addition, it is often common for new companies to price a secondary offering of additional shares six months to a year after the IPO, so traders may want to keep an eye out for those offerings. With those caveats in place, these all could be great 2021 alpha plays.