It’s been a mixed year for IPOs, to say the least.
The recent Twilio (NYSE: TWLO) initial public offering was seen as a litmus test for the IPO market.
By accounts, the market has passed the test. Twilio’s stock price has soared since its IPO. Its stock has now than tripled from the lower range of its targeted IPO price.
It’s truly been one of the bright spots among all the Brexit commotion, and the broader IPO market for that matter.
But . . . Twilio is a typical Silicon Valley tech unicorn. Based in San Francisco, it helps companies send automated messages to its users. It lost $35 million last year and calls Facebook’s (NYSE: FB) WhatsApp its top customer.
Still, for investors that overlooked the fact that Twilio trades north of 10 times sales, there was a nice profit to be made. But the worry remains that Twilio shares will end up like so many IPOs over the last year: crashing hard after a great initial run.
For investors who are skittish ̶ or kicking themselves for missing out on the likes of Twilio ̶ there’s still plenty of money to be made in the IPO market.
But the key isn’t to get in early, it’s to find those forgotten IPOs that are trading at valuations too cheap to ignore. With that in mind, here’s the top two IPOs you can still profit from today:
Top IPOs to Buy Today: US Foods (NYSE: USFD)
US Foods is trading just 5% above its IPO price from in May. The company markets and distributes fresh, frozen and dry foods to customers like hotels, restaurants, nursing homes and hospitals. Granted, the food-service business isn’t all that sexy, but that’s part of the reason its IPO didn’t skyrocket.
U.S. Foods is in a niche market that it dominates with about 10% of market share. It is one of two food-service distributors operating nationwide in the U.S. It also trades at a discount to its top competitor, Sysco Foods (NYSE: SYY). Recall that Sysco tried to buy U.S. Foods last year, so it’s certainly a prized asset.
Top IPOs To Buy Today: Pure Storage (NYSE: PSTG)
Pure Storage is was one of the most anticipated IPOs of 2015, but the stock has fallen 35% from its IPO price as investors dump growth-focused companies.
Pure Storage is a flash storage company, which is a great market to be in these days. This type of storage is cheaper and simpler than disk-based storage. It’s now being used everywhere from network-based storage to servers. Plus, with the rapid rise of enterprise storage, Pure Storage has a great growth opportunity.
By some estimates, data storage market is a $25 billion business. Pure storage generates just over $260 million in revenues; there’s plenty of opportunity for Pure Storage to capture market share. And with just a $2.1 billion market cap, it could easily be a takeout target for a company looking to gain access to the flash storage market quickly.
In the end, predicting what IPOs will do on their big day is anyone’s guess. However, astute investors can get into some of these IPOs at great prices after the hype wears off.