A Trio of Overlooked IPOs

Focus: STRATEGIES

Marshall Hargrave Image Marshall Hargrave Contributing Editor, Wyatt Investment Research

Technology companies get a lot of hype, but they don’t always payoff for retail investors. It’s tough to pick winners among tech IPOs, states Marshall Hargrave, editor of Wyatt Research's Daily Profit.

Our research has identified three top IPOs from the last year that investors may be overlooking. Shares of all three are still trading at attractive prices. All three are still attractive buying opportunities, after having been overlooked by much of the market. 

Trivago (TRVG) shares are up just 10% from its IPO in December. Users can search and compare hotels and rates on Trivago, making it a trio in the industry with Priceline (PCLN) and Expedia (EXPE). Trivago was the last “big” IPO of 2016, but shares are flat in 2017.

It’s worth noting that Expedia (EXPE) owns the majority stake in Trivago, and Priceline (PCLN) is where it gets a lot of its revenue. Considering Priceline and Expedia are both very solid and stable companies, having such a close relationship isn’t necessarily a negative.

Trivago continues to grow revenues nicely, and trading at just two times sales, it’s trading at a discount to major peers. More people are traveling, and that is a powerful trend for Trivago and the travel industry. Booking platforms and hotels advertise on Trivago and pay for the clicks received from Trivago users.

ZTO Express (ZTO) is a Chinese package-delivery company that came public in October 2016. Shares have fallen almost 33% from its October IPO price as investors remain cautious about the Chinese economy.

However, the growth opportunity in the Chinese shipping industry will continue to do well given the large population. The parcel delivery market in China is expected to more than double from $600 billion in 2015 to $1.5 trillion in 2020. 

ZTO Express is a diversified bet on the continued boom of the e-commerce market in China. And for U.S. investors, ZTO is the best way to tap into the consumer market in China. Plus, the company is already profitable, which is rare for a newly public company.

MGM Growth Properties (MGP) is the real estate spinoff of MGM Resorts (MGM) and it completed its IPO last year. It owns and leases casinos and hotels.

The beauty of REITs is that they pay impressive dividends, and MGM Growth’s dividend does not disappoint. It offers a 6% dividend yield.

MGP is one of the best pure-plays on the U.S. gambling market, with the majority of its resorts in Las Vegas. But shares are flat over the last six months. Investors are shunning the casino stocks; they’re worried about a slowdown.

However, MGM is a big bet on the growth and rebound of the Las Vegas gambling market. MGM Resorts offers an attractive 6% dividend that investors won’t find elsewhere. 

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