5 Recent Red-Hot IPOs Still May Have Massive Upside Potential

Investing

Published: February 3, 2021 8:33 am

Last Updated: April 21, 2021 7:37 am

Last year was the rebirth of the initial public offering, and the momentum looks to be carrying into 2021 as well. Some of the most highly anticipated companies came to the public markets, and while most have shown sparkling gains, they have been trading long enough to have had some of the weaker holders exit while the so-called smart money and long-term holders have looked for pullbacks to add to positions.

We screened our 24/7 Wall St. research database looking for the recent top IPOs that still look like outstanding stock to own for years to come. We found five top ideas that, while not cheap, may offer patient investors some huge upside in the next 12 to 18 months. While all five are rated Buy at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Airbnb

Increasingly, travelers domestically and overseas have turned to this company to find comfortable lodging at all price points. Airbnb Inc. (NASDAQ: ABNB) operates a platform for stays and experiences to guests worldwide. The company’s marketplace model connects hosts and guests online or through mobile devices to book spaces and experiences. It primarily offers private rooms and luxury villas. The company was formerly known as AirBed & Breakfast and changed its name in November 2010.

The stock was a parabolic winner out of the gate last month, and while it backed off some, it still offers investors an opportunity to scale in funds and start acquiring shares to build a position. Jefferies is very positive and noted this in a recent report:

In our view, Airbnb is a best-in-class asset with a powerful brand and solid organic growth and we believe it is a key reopening play in travel and a core investment in growth tech portfolios. We pointed out that with COVID-19 taking a heavier toll on Airbnb’s competitors, we think the company has an opportunity to gain market share, riding an exceptionally strong brand name and several new use cases unlocked by the pandemic. We noted that the company was on a nice growth trajectory before COVID-19, and we model a return to 2019 bookings and revenue levels by the second half of 2021 and continued double-digit growth through 2025. Trading at 16x 2022 net revenue, we think it is justified Airbnb trades at a premium to innovative market leaders given margin potential and best fundamentals in travel.

Jefferies has a $170 price target for the shares, and the Wall Street consensus target is just $156.31. Airbnb stock closed above that level on Tuesday, at $179.17 a share.