Top IPO’s of 2009 (Part I): BPI, CYOU, SWI, DGW, RCON

The first half of 2009 brought us some memorable IPO’s, but for the most part is was forgettable.  As we approach the final quarter of the year with a flurry of IPO’s expected to price in the coming days, I thought I’d rank what I think are the top IPO’s of 2009.  Please note that these are not ranked solely on performance, but rather on fundamentals such as earnings and sales growth, ROE and margins.  No, this is not an extremely scientific ranking.  You data junkies can crunch the numbers and run through your algorithms elsewhere 🙂

1. Bridgepoint Education (BPI):  Since turning its first yearly profit in 2007, this provider of online education to over 30K students has been on a tear.  In 2008, its EPS rocketed to .51/share vs just .06/share the year before and here in 2009 it’s expected to double to a little over a buck a share.  Sales growth has been equally impressive with quarter over quarter growth in the last 4 quarters of 183%, 175%, 163% and 127%.  Technically, it’s in the process of carving out a new base after more than doubling from opening day.  Get more BPI analysis here.

2. (CYOU): (SOHU) spinoff probably carries more risk than most of the IPO’s coming to market in 2009 because more than 90% of its revenue comes from one online game – the martial arts game Tian Long Ba Bu.  Ah, but with risk comes considerable reward and CYOU hasn’t disappointed.  It too has more than doubled since opening day and is now in the process of carving out a new base.  Growth really ramped up in 2008 following the launch of Tian Long in May of 07, vaulting from an EPS of .10 in 2007 to 2.16 in 2008.  That growth has been tailing off quite a bit, but remains strong.  Quarter over quarter EPS growth in the past 4 quarters was 999%, 200%, 97% and 19% last quarter.  The company hopes to get the growth going again with some new games which it has in the pipeline.  Get more CYOU analysis here.

3. Solarwinds (SWI): No, this isn’t a solar company.  Indeed, it’s a strange name for a company that provides network management software, but it certainly hasn’t stunted the growth of this Austin, Texas company.  This is a company that has been around for more than 10 years and boasts more than 80K customers.  After stumbling a bit in 2006, the company got back on track and has posted an EPS of .21/share in 2007 (400% growth over 2006), .38/share last year and is expected to post an EPS of .56 this year.  Technically, this is a stock that has broken out twice this year – the first time above 15.96 on June 29th and then again on Sept 4th from a bullish triangle formation.  It’s too extended for entry at this time.  Get more SWI analysis here.

4. Duoyuan Global Water (DGW): I think investors would be wise to take a close look at Chinese companies in the water management/treatment/infrastructure areas and DGW has to be one of those.  Guo Youzhi, general secretary of the China Desalination Association, has said that only 20 percent of industrial wastewater in the country is efficiently re-utilized and 80 percent is being simply discharged.  According to a March 2009 study by China Research and Intelligence, over 70% of Chinese rivers, lakes, and seashores, and 90% of its underground water supply in urban areas are polluted.  The lack of clean drinking water and pollution in general could very well stop China’s growth in its tracks but with crisis comes opportunity.  Duoyuan EPS growth nearly doubled in 2007 and 2008 and is expected to more than triple this year before flattening out next year.  Get more DGW analysis here.

5. Recon Technology (RCON): China + IPO + commodities = hot stock and Recon Technology is no exception.  This off the radar China IPO rocketed out of the gates on July 30th, carved out a bullish triangle formation, then broke out on Sept 3rd.  It’s up about 50% following that breakout.  They provide computer software to mining and petroleum companies in China (which include behemoths CNPC and Sinopec) which aides in extraction.  One caveat is that the company is very small with just over $10 million in revenues in the past year.  So while growth remains robust, it comes from a small base.  It will be interesting to read their earnings report on September 28th.  Get more RCON analysis here.

I’ll be back later this week with part deux and another 5 top IPO’s from this year.

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