Commodities & Metals

Best Recent IPO: Titan Machinery (TITN)

If you have been following our IPO index over the last few weeks you have probably noticed that many IPO’s are being withdrawn “due to market conditions” or that SPAC IPO’s are coming out more than ever.  But there are actually some bright spots out there in IPO’s.  Titan Machinery, Inc. (NASDAQ: TITN) is a post-IPO stock that has been on fire.

Titan owns and operates a network of full service agricultural and construction equipment stores, it might not come as that much of a surprise.  Three years ago or more no one cared about any of these agriculture plays, but now with ethanol, China, India, Africa, Latin America, biodiesel, switchgrass, a hearty appetite to stuff our bellies, commodity traders, and every other issue chewing up everything we can grow, this is one of the hottest sectors in an otherwise crummy market.  It’s almost as though every farmer in Africa, Asia, and Latin America can suddenly buy up the world’s food supply and spend unlimited amounts on machinery and ag services.

This one came public in early December so it’s only about 60-days old.  Craig Hallum and Robert W. Baird were the only underwriters, so it is likely that this won’t get the largest or strongest analyst following.  But traders don’t mind, and in fact you might think they prefer it.  Baird started this with an Outperform rating in mid-January at the peak of the market sell-offs when everyone was negative daily.  But out of the end of 2007 IPO’s, this one appears to be the leader in percentage gains.  This priced at $8.50, and has traded in a range of $11.50 to $18.50.  Today shares are up almost 4% at $16.85.

As of last look this had only 205,272 shares in the short interest, which is close to 1.0 days to cover.  The market cap as of last look is $225 million.  Traders who love agriculture obviously love this one.  Investors who got shares at the IPO are up nearly 100%, and any investor who bought on the heels of its IPO are up close to 50%.  Not bad for this market.

Jon C. Ogg
February 12, 2008