Cabot Turnaround Letter Weekly Update
Today’s note includes earnings updates and the podcast.
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Initial Public Offerings, commonly referred to as IPOs, happen when a private company first goes public and offers shares of the company as new stock issues. Companies can raise a lot of money through these offerings, while investors can take advantage of the potentially lucrative new stocks before they skyrocket in price.
The problem is that after the IPO event, there is often a period we refer to as the post-IPO blues. This is when the excitement of the roadshow and big event has passed, and a stock settles down into real life as a public company. In general, this happens at some point in the first four months of trading, and after the initial surge (which usually occurs on day one). The stock then trends down, often landing well below its IPO price.
This pattern happens repeatedly because it takes several quarters for everyone to understand the ebbs and flows of revenue and earnings, get comfortable with the company’s business model, and cozy up to management’s communication style. There is a relationship to build between a stock and its public investors. And that takes time.
For example, of the IPOs tracked by IPOScoop.com in 2019, 67 had negative returns for the year, 12 returned less than 10% to investors, and 12 had gains of more than 100%. And according to Barron’s research, IPOs can underperform up to 2 ½ years after their initial pricing.
This isn’t to say you should never invest in IPOs. There have certainly been plenty of winners in the market. But investors must tread carefully when buying IPOs.
For stocks that you don’t need to worry so much about, download our FREE report, 10 Forever Stocks to Buy Now—and How to Find the Best Growth Stocks, today.
As with any stocks, the key to successfully investing in IPOs is to look for fundamentally strong companies with the ability, strategy, and good management to continue growing over the long-term.
Today’s note includes earnings updates and the podcast.
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Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
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Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
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IIn today's Weekly Video small cap analyst Tyler Laundon illustrates how the broad market has put together another encouraging week and he digs into a few ETFs that show pocket of particular strength.
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We’ve seen a big improvement in the way many growth and early-stage stocks are acting over the last two weeks. Many of our stocks that sold off in March have been gaining some altitude back, and many of those that were acting well to...
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Markets seem to be pausing a bit, with some stocks losing momentum while a few show surprising strength.
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It’s been another mostly constructive week as many of our stocks inch higher and the economic picture continues to improve.
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EBITDA, or earnings before interest, taxes, depreciation and amortization, is a straight-forward measure (not a perfect measure, though) of a company’s cash operating profits. But, like seemingly all metrics published by company managements, it is usually adjusted for unusual items that may be non-recurring.
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This Friday is the expiration of our six April Covered Call positions. I would categorize these six positions as a good, but somewhat mixed bag, as only one trade looks like it will expire for its full profit potential (ANF), while four (TRIP, SUM, AMKR, AZEK) in...
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The leading indexes continue to hit record highs, telling us the bull market that began over a year ago, though it is showing some signs of age, remains intact.
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Today’s note includes earnings updates and the podcast.
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Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
Read More
Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
Read More
In this week's video, Mike Cintolo talks about the market's second straight constructive week with a little character change out there.
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Sellers Fading—but Will the Buyers Show Up?
We’re all about going with the evidence, and when it comes to growth stocks, the evidence was nearly uniformly negative (or at least not positive) for most of the past month. The vast majority of leading stocks, many...
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There’s no doubt things are looking a little better out there as many software, MedTech and other growth stocks retested their March lows late last week then turned north. The timing of that short-term reversal, coinciding with the end of the first quarter, definitely...
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Nearly 95% of companies in the S&P 500 are now trading above their 200-day moving average, according to Dow Jones Market Data, the highest percentage since May 2013. As if we didn’t have enough to worry about, as of late February, investors had a..
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Determining a company’s underlying value is difficult, and clearly more of an art than a science.
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While the headlines read “S&P 500 at All-Time Highs,” it’s not all smooth sailing in the market as countless stocks are still suffering from the Nasdaq rout that started a month ago.
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The bull market is still intact, but the signs of fraying that often emerge during long topping actions continue. Still, by focusing on the right stocks, we can do well.
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