In recent times, the U.S. market, which is braving challenges amid global headwinds including the Greece drama and the deep-seated fears over the Chinese economy, is also witnessing decent IPO (initial public offering) activities. Though 2014 marked one of the strongest years for IPO activities in over a decade, the performance so far in 2015 is not all disappointing either.  

According to a firm that tracks IPO performance, Renaissance Capital, during the eight months ended August 2015, 131 U.S. IPOs raised around $13 billion compared to 189 IPOs that generated proceeds of around $40.7 billion over the same time frame in 2014. Notably, IPO activity exhibited a two-fold rise in second quarter 2015, compared to first-quarter 2015.

When the question arises regarding investing in stocks that recently marked their debut in the exchange, it’s better to be a little patient if you don’t like taking on too much risk for an astonishing return. Actually, it’s safer to see how these stocks perform after their debut and then bet on those that look steadier and have further growth potential. This strategy may not offer you stupendous returns, which is the key attraction of IPO investing, but it lessens the chance of losing. Also, it allows you to take position in stocks that have just started their success story.     

4 Lucrative New Stocks

Here we have selected some of the best performing IPOs so far in 2015 that still have potential in the long run. Our shortlisting process not only considers the returns from the stock but also looks into its fundamentals that indicate promising growth prospects.

Shake Shack Inc. (SHAK – Snapshot Report)

Opening of Trading: Jan 30, 2015
IPO Price: $21.00.  
Current Price: $47.81
% Change: +128%

The company reported a 74.7% year-over-year increase in its total revenue to $48.5 million for the second quarter ended Jul 1, 2015. Further, for the fiscal year ending Dec 30, 2015, the company raised its revenue guidance range to $171–$174 million from the previous guidance range of $161–$165 million.

Also, it remains focused on business expansion as it intends to open 12 total new domestic company-operated Shacks (restaurants) in 2015.  Further, the company expects to open at least 12 new domestic company-operated Shacks in 2016 and later.

Shake Shack currently sports a Zacks Rank #2 (Buy), which further underscores the potential for outperformance in this company. The Projected Sales growth of the company for the current fiscal year stands at 51.23% compared to the industry average of 8.39%.

Shopify Inc. (SHOP – Snapshot Report) is a Canada-based company operating in the Internet services space.

Opening of Trading: May 21, 2015
IPO Price: $17.00.  
Current Price: $26.81
% Change: +58%

Shopify’s revenue strength is reflected in the fact that it reported a 90% year-over-year increase in revenues to $44.9 million in second quarter 2015 (ended June 30). Further, the company expects revenues in the range of $47.0 million to $48.0 million for the third-quarter 2015. For 2015, it expects revenues in the range of $181 million to $183 million.

Shopify currently carries a Zacks Rank #2 (Buy). The Projected Sales growth of the company for the current year stands at 67.28% compared to the industry average of 11.24%.

Entellus Medical, Inc. (ENTL – Snapshot Report) is a Minnesota-based company in the Medical Instruments space.

Opening of Trading: Jan 29, 2015
IPO Price: $17.00.  
Current Price: $21.28
% Change: +25%

The company’s revenues of $15.2 million in the second quarter of 2015 increased 22% year over year. For the third-quarter 2015, the company expects revenues in the range of $13.9 million to $14.4 million, which would reflect growth of around 19% to 23% compared to the third quarter of 2014. Further, for full-year 2015, revenues are expected in the range of $58.5–$61.0 million, reflecting growth of 20% to 25%.

Notably last month the company announced collaboration with Fiagon NA Corporation, a manufacturer of innovative surgical navigation systems.

Entellus Medical currently carries a Zacks Rank #2 (Buy). The Projected Sales growth of the company the current year stands at 22.84% compared to the industry average of 5.85%.

Summit Materials, Inc. (SUM – Snapshot Report) is a Colorado-based company in the Building Materials space.

Opening of Trading: Mar 12, 2015
IPO Price: $18.00.  
Current Price: $23.40
% Change: +30%

The company reported net revenue of $329.0 million in second-quarter 2015, reflecting an increase of 12.5% year over year.  Boosting its acquisition strategy, in July 2015 Summit Materials completed the acquisition of a 1.2 million short ton capacity cement plant in Davenport, Iowa along with seven cement distribution terminals from Lafarge North America Inc.  Also in August, the company completed the acquisition of Utah-based vertically integrated construction materials company, LeGrand Johnson Construction Company.

Summit Materials currently carries a Zacks Rank #2 (Buy). The Projected Sales growth of the company the current year stands at 14.37% compared to the industry average of 1.65%.

Bottom Line

Though Shopify, Entellus Medical and Summit Materials reported net loss in their latest quarterly results, we believe their revenue strengths and efforts towards growth through inorganic routes position them well for future growth.