Top IPO’s Of 2009 (Part II): GAME, LOGM, RST, TRIT, LIWA

Several days ago I posted what I thought were the top 5 IPO’s of 2009 and in this report I round it out with the next 5 best 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 🙂

6. Shanda Games (GAME):  This was one of the big IPO’s from last week, but didn’t perform as well as A123 Systems (AONE) out of the gates.  After opening at $13, it sold off the rest of the day and closed below $11.  Considering the run that the China gaming stocks have had, I think this IPO at this stage potentially marks a top in this sector.  That’s not to say the growth won’t continue, it’s just that they have gotten ahead of themselves a bit. 

Shanda Games is a spinoff of Shanda Interactive (SNDA).  Certainly, the success of the (CYOU) spinoff from (SOHU) had something to do with the IPO.  With the overall market risk appetite increasing and gaming stocks on fire, it makes sense.  Shanda Games contributes 95% of the revenue of Shanda Interactive and the bulk of that revenue is concentrated in just two games.  Still, that’s less of a risk than (CYOU), which gets most of its revenue from just one game.  Shanda Games profits nearly doubled in 2008 over 2007 and the company is on pace to come close to that again here in 2009.  Get more GAME analysis here.

7. Logmein (LOGM): Logmein provides remote access software enabling you to access your computer from anywhere.  You can even access your desktop from your iPhone.  Cool stuff!  This is a small company that really started seeing some growth towards the end of 2007 and is expected to turn its first yearly profit here in 2009.  Quarter over quarter revenue growth over the last 4 quarters has been impressive at 99%, 86%, 73% and 58% while EPS growth has come in at 108%, 150%, 200% and 289%.  Growth is expected to moderate in 2010, but this remains a company to keep on the radar.  Technically, it’s in the process of carving out its first base which may end up as a cup with handle.   Get more LOGM analysis here.

8. Rosetta Stone (RST): Many people are familiar with this software company that makes learning a foreign language much easier.  The company rolled out a high profile ad campaign during the Summer Olympics last year featuring Michael Phelps.  Smart move because it helped generate awareness of the company ahead of the IPO less than a year later.  While the stock has had a tough time gaining traction since the IPO launch on April 16th, and took a hit after lowering guidance about a month ago, this is still a company experiencing impressive growth.  After stumbling in 2006 with a loss, it has bounced back in a big way, returning to profitability in 2007 and posting record profits last year.  Here in 2009, the company is expected to grow EPS by another 40%.  It’s going to be at least several weeks before the technical damage is repaired, but this is one company that must be on the radar.   Get more RST analysis here.

9. Tri-Tech Holding (TRIT): In the first top 5 IPO report, I highlighted Duoyuan Global Water (DGW) as a top play on China water scarcity.  I think Tri-Tech Holdings is a darn good play as well.  The company develops and implements systems (both hardware and software) to assist government entities in monitoring and managing water supplies.  It’s a very small company and a fraction of the size of Duoyuan, but the growth and profit potential is just as great, if not greater in my opinion.  The stock has already doubled in price following the IPO on September 10th and I don’t think it’s done.  I’m looking for one of two things for an entry – one entry would be on a filling of the gap just below 12 and another entry would be a breakout from the first consolidation period of at least two weeks.  Get more TRIT analysis here.

5. Lihua International (LIWA): Rounding out my top 10 IPO’s of 2009 list is another Chinese company which also IPO’d in September.  Lihua is relatively off the IPO radar of most and that’s just the way I like it.  The stock has also doubled in price following the IPO and has yet to digest gains.  I think a breakout from the first consolidation period of at least two weeks offers an entry point. 

Lihua makes copper wire for a variety of industries including automotive, electronics and telecom.  A great pick and shovel play on China’s continued growth.  While growth hasn’t been as spectacular as some China companies and the company can be inconsistent at times, the overall growth is very strong.  The company posted EPS growth of 72% in 2007, 38% last year and is on pace for growth of around 25% here in 2009.  Get more LIWA analysis here.

Honorable Mention:  NIVS Intellimedia (NIV), Opentable (OPEN), Medidata Solutions (MDSO)

Disclaimer: I don’t own any of the stocks mentioned above.

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