Investing

Top IPO Stocks From This Year to Be Added to the Russell 2000

With gigantic Alibaba Group Holding Ltd. (NYSE: BABA) initial public offering (IPO) in the books, and the excitement from the gigantic and successful offering starting to die down a bit, we thought in retrospect one aspect of the deal may have gone unnoticed. Ultimately, most good IPO deals continue to trade solidly after the debut day, and eventually are added to one of the top indexes, like the Russell 200, and eventually even the S&P 500. Because of Alibaba’s domicile in China, it will never be added to the S&P 500, a move that will keep domestic index managers from buying the stock.

The good thing for many of the top deals priced already this year is that they are eligible for entrance to the major indexes when all criteria are met. A new report from Jefferies highlights the top IPO stocks from this year that will be added to the Russell 2000 on September 30. The list is a who’s who of top deals, and we highlight the five highest profile names.

Arista Networks Inc. (NASDAQ: ANET) went public on June 6, and the company, which competes with the likes of Cisco Systems and Brocade, has been absolutely on fire since the debut day of trading. Priced at $43 a share, Arista is a profitable company that may soon come back to the market with a secondary offering.

The Thomson/First Call consensus price target for the stock is $88.81. Shares closed Monday just below that level at $83.84.

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El Pollo Loco Holdings Inc. (NASDAQ: LOCO) was a top deal this year, and the chicken franchise has continue to trade well since its debut. The stock went public on Friday July 25 at $15 a share. The stock opened at $19 and traded all the way to $24 the first day. Many liken the company to Chipotle Mexican Grill, and the shares continue to trade solidly, now up over 100% from the debut.

The consensus price target for the stock is at a stunning $28.03. That’s stunning, because shares closed Monday at $35.07.

GoPro Inc. (NASDAQ: GPRO) was a huge home-run this year for investors and continues to be blazing hot. The company went public on June 25, and the meteoric rise in the shares of the company famous for wearable cameras and other devices was truly incredible. Priced at $24 on the day of the IPO, the shares have continued to soar as momentum traders have obviously dog-piled the stock.

The consensus price target for GoPro, which by-the-way posted a net loss was $19.8 million for the second quarter, almost four times bigger than the $5.1 million loss from a year earlier, is set at $59.88. The stock closed way above that Monday at $68.27.

Kite Pharma Inc. (NASDAQ: KITE) was a successful biotech IPO offering in a year that was cluttered with biotech deals that floundered. The company went public on June 20. Pricing well above the original $12 to $13 range at $17 a share, the stock traded as high as $30.50 the first day before closing at $29. The bullish optimism around Kite stems from its lead program, which uses chimeric antigen receptors to reprogram a patient’s T cells and transform them into cancer-fighting agents, called CAR-T immunotherapies.

The consensus price target for the stock is set at $33.33. Shares closed Monday at $25.53.

ZS Pharma Inc. (NASDAQ: ZSPH) is another of the many biotech deals that came this year, and another top success story. The company priced just under 6 million shares at $18 when it went public on June 18. The late-stage bio-pharmaceutical company develops drugs to treat renal, cardiovascular, liver and metabolic diseases. Shares traded as high as $28.38, where it closed the first day. Since then the stock has traded in to the low $40s before rolling back over.

The consensus price target is set at whopping $52.50. The stock closed on Monday at $34.36 a share.

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We often cover when stocks are added or deleted to the various indexes. Often that added buy-side volume doesn’t make all that much of a difference. In the case of these stocks, the fact that most have a very thin free-float could help boost the shares on the purchase date for the Russell 2000.

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