IPOs Return 21 Percent in February

February was a big month for IPOs. Eighteen new U.S. stocks hit the market last month, the most since May 2011 and two more than last February.

The busy IPO month showed that market conditions have improved to the point where companies feel safe enough to begin public trading. That most of those companies were rewarded with some pretty healthy returns could convince more of them to jump in the IPO pool in the coming months.

The average return among February’s 18 IPOs was 21.4%. Only two deals are currently trading below their IPO price. The average first-day return was 18%, meaning investors were wise to get in early on the new stocks. Considering IPOs fell 10% in 2011, their February performance was an encouraging sign.

What helped boost those returns were some more tempered offer prices. On average, offer prices were 14% below the midpoint of their given ranges; 45% of the deals priced below their range. By watering down expectations, companies essentially offered investors a discount right out of the gate – hence some of the big early jumps in price.

February’s IPOs may have been helped by a stock that hasn’t even debuted yet. Facebook filed for its highly anticipated IPO in late January, a move that may have breathed some life into a stagnant IPO market on hype alone. Facebook isn’t scheduled to actually go public until sometime in May, but the social media giant’s filing may have shown other companies that the water is warm.

Proto Labs (NYSE: PRLB) was by far the month’s biggest gainer, popping 87% from its February IPO price of $16 a share. Greenway Medical Technologies (NYSE: GWAY) and Brightcove (Nasdaq: BCOV) also made huge strides of 51% and 50%, respectively.

March is already off to a fast start after Yelp’s (NYSE: YELP) 64% gains in its market debut today. Three more IPOs are scheduled to price next week.

We’ll see if March can match February’s IPO fervor.