Investors are no stranger to large IPO pops, but in the last year we have seen incredible post-IPO runs, indicating that these companies were priced too cheap. Thus I am looking at the top five to determine if more upside exists.
#5 Ambarella Inc (NASDAQ:AMBA)
Since its IPO on Oct. 10, 2012, the technology company Ambarella Inc (NASDAQ:AMBA) has rallied 154.6%. Currently the stock is trending higher and is just $0.74 from reaching new highs of $16.00. With that said, this is a company that is trading at just 3.40 times sales and 25 times earnings.
The company has sales growth of more than 25% and continues to see margin improvements. Thus I say that it is very possible that this large post-IPO performer continues to tick higher.
#4 Chuy’s Holdings Inc (NASDAQ:CHUY)
Chuy’s Holdings Inc (NASDAQ:CHUY) is a restaurant serving what it calls “Tex Mex” food, and its growth has been remarkable. As a result of its 25% top-line growth, the stock has responded with a 156.54% post-IPO gain. Despite these gains the stock trades at just 3 times sales and 60 times earnings (with margins rapidly improving).
My only problem with the company is that its comparable store sales are only growing 2.30%, meaning most of its growth comes from expansion. With that said, the stock is still cheap for a company with 25% top line growth, hence I’d still be a buyer.
#3 TESARO Inc (NASDAQ:TSRO)
TESARO Inc (NASDAQ:TSRO) is a zero-revenue-producing clinical stage biotechnology company that has gained 166% since its IPO. The company’s lead product is Rolapitant, a Phase 3 drug for nausea and vomiting associated with chemotherapy. Then, it has an early stage drug that treats breast and ovarian cancers, which is far from an FDA approval.
The problem is that this developmental company trades with a valuation over $1 billion and seeks stiff competition from Merck if its drug Rolapitant makes it to market. Therefore, with limited sales potential short-term, I’d say sell this rally.
#2 Shutterstock Inc (NYSE:SSTK)
Shutterstock Inc (NYSE:SSTK) is a marketplace for commercial digital imagery, and has seen its valuation increase 190.12% since its IPO. The company is growing at about 35% year-over-year, and has both strong margins and consistent improvements in margins. The stock trades at 47 times next year’s earnings and 9 times sales, hence I do think it is a bit expensive compared to growth.
Both Ambarella Inc (NASDAQ:AMBA) and Chuy’s Holdings Inc (NASDAQ:CHUY) have high 20% growth and trade at just 3 times sales, therefore I don’t think Shutterstock Inc (NYSE:SSTK) is worth the premium.