For the last two weeks, I’ve told you about the market-beating returns you can earn from IPOs.
For example, first-day gains for investors in the recent IPO of Inari Medical (NARI) reached 123%.
But who wants to hear about the big profits we could have earned? Instead, we want to hear about the profits we can earn in the future!
So today, I’d like to share two “hot IPOs” that are worthy of your consideration…
And potentially worthy of your hard-earned dollars.
Profiting for the Robot Apocalypse
The first deal is in the robotic automation sector.
Automation is a technology mega-trend. But forget about isolated robots running around independently. That’s wildly inefficient, and it poses security risks.
Instead, to see the future, look at CloudMinds (Proposed Ticker: CMDS):
CloudMinds has developed a cloud-based system to operate large, connected, secure networks of intelligent robots.
But before we consider investing in this company’s IPO, first let’s see if it passes the “Five Hallmarks of a Worthy IPO” that I’ve been teaching you about …
Putting CloudMinds Through Our Filters
- Revenue of $148 million in the last six months easily tops our $50 million threshold. Plus, it’s growing rapidly — up 350% in the last six months.
- Its total addressable market is $103 billion and barely penetrated, leaving plenty of room for more triple-digit growth.
- Insider ownership is an impressive 63.5%, well above our 30% threshold.
- The proposed offering is for $500 million, well above our $100 million minimum to ensure ample liquidity in the aftermarket.
- In terms of profitability, the company hasn’t turned the corner yet. But it’s only released financials through mid-2019. When updated numbers are released, I expect we’ll see the company is on a clear path to profitability.
That’s a very strong score.
Furthermore, CloudMinds is coming to market with top-tier bankers: Citi, Credit Suisse and JP Morgan.
If you’re interested in digging deeper, you can read its IPO prospectus here.
A Rare Opportunity in Precision Testing and Medicine
The second deal is in the Precision Testing and Medicine sector.
You see, if Covid-19 has taught us anything, it’s that there’s a dire need for rapid and accurate medical testing.
Enter Progenity (Proposed Ticker: PROG).
This biotechnology company is a proven innovator of molecular testing products.
Here’s how it stacks up against our screening criteria:
- Revenue of $143 million in 2019 easily tops our $50 million threshold.
- The total addressable market for molecular testing products in the U.S. alone is worth $2.5 billion. That means Progenity can benefit from decades’ worth of growth potential.
- Insider ownership is off the charts. A single insider, the CEO, owns 38.9%. And as a group, insiders own 84%, ensuring their interests and our interests are perfectly aligned.
- The proposed offering is for $100 million, which meets our minimum requirement.
- In terms of profitability, the company hasn’t turned the corner. But in Q1 2020, losses narrowed by 38%. Based on Q2 numbers, which I expect Progenity to share before it goes public, we should see a clear path to profitability.
If you’re interested in learning more before its IPO, you can review its prospectus here.
It All Comes Down to Valuation
To be clear, I’m not recommending buying these two IPOs blindly.
You see, neither company has set pricing terms yet. Pricing is the last step in the process, and it typically happens the week before the IPO.
Once we have that info, we can we determine whether these IPOs are underpriced or overpriced…
And whether they’re worthy of our hard-earned dollars.
So for now, put CloudMinds and Progenity on your “Hot List” for 2020…
And stay tuned for my updates!
Ahead of the tape,