Newly listed companies are often among the market’s best technical performers. In a scan of 2011’s new issues, MoneyShow.com’s Kate Stalter found some small-cap names with solid support since their debuts.
I regularly track recent IPOs—meaning anything that’s gone public within the first ten or 12 years—for signs of fundamental and technical strength.
These newer companies often have products and services that are still hot and in demand, and company management often remains creative and enthusiastic. All together, that can be a recipe for healthy growth.
In addition to new IPOs, some of the market’s best stocks are small caps. As I was screening for top-performing stocks that made their debuts in the past year, I also scanned for market cap. Four new small-cap names bubbled to the top of my screen.
Golar LNG Partners (GMLP), which provides floating storage and refueling units for liquefied natural gas carriers, went public in April at $23. As of Tuesday, it was trading at around $33.40.
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Golar LNG Partners has a market cap of around $689 million, and it trades 188,000 shares a day. It was spun out of Golar LNG (GLNG), which also provides marine transportation services for the LNG industry.
Fundamentally, the company showed an earnings decline in 2011, but is expected to see a 31% increase in profitability this year, to $2.01 per share.
The stock is out of technical buy range at the moment, after clearing a five-month price consolidation in early December. It bolted 5% last week, so needs to take a breather before offering a new buy point.
Another energy-related name that’s shown good action in recent months is SandRidge Mississippian Trust (SDT). The entity was formed by SandRidge Energy (SD) in late 2010 to own royalty interests in oil and natural gas properties in Oklahoma’s Mississippian formation.
The stock made its NYSE debut at $21 in April. It’s trading at around $30.60 now.
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Though it’s getting support well above its ten-week average, the stock reversed sharply the week ended January 6, after retreating from an all-time high of $32.27. So far, the support looks healthy, but the stock has little ownership among institutions, so volatility could be an ongoing concern.
This stock has some unique elements that many investors find attractive: As a royalty trust, its owners receive proceeds from well production. The stock has a dividend yield of 11%. Many oil-and-gas trusts and partnerships have attracted investment in the poor market conditions in recent months, as investors sought yield to offset uncertain price appreciation.
Another top-performing company from the ranks of small-cap IPOs is Tesoro Logistics (TLLP), a master limited partnership with a dividend yield of 4.3%.
This is another entity that was spun out from a parent company from the energy sector; in this case, refiner Tesoro (TSO). The company provides distribution, transport, and storage services for crude and refined oil in the US
The stock went public at $21 in April; it was trading near $32.26 on Tuesday.
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Like SandRidge, Tesoro Logistics pulled back from an all-time high in 2012’s first week of trade. I’m watching to see if the stock regains its ten-day line, preferably in heavier-than-average volume.
This is a very thinly traded issue, moving only 50,000 shares per day. It has a market cap of about $500 million.
The stock has sported some volatile trade in its short history, not unusual in a thinly traded equity. Fewer shares traded can mean it’s easier for a fund that’s unloading shares to send the price sharply lower—something retail investors should be aware of with smaller stocks.
Finally, Thermon Group Holdings (THR) went public in May at $12. It was trading at around $17.69 on Tuesday.
The company makes heating cables and related gear for industrial applications. Its market cap is just $509 million and it moves 109,000 shares a day—definitely on the thin side.
Profitability is expected to show a dramatic turnaround this year, from two cents per share last year to an estimated 77 cents a share.
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The chart has shown some bullish action in recent weeks, climbing above its ten-week average. However, like Tesoro Logistics, the thin trade means the stock should be handled with caution, and buyers should be alert for sharp downside action.
The stock rallied to a new high on January 3, then reversed lower in the same session. It’s regained some of the lost ground since then, and is holding above its short-term ten-day moving average.
With IPOs, I don’t ever concern myself with getting in at the launch. Instead, I prefer to wait until the stock has proven itself technically and fundamentally. These names here could offer fresh buy opportunities in the not-so-distant future.
At the time of publication, Kate Stalter did not own positions in any of the investments mentioned in this column.
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