What are the best IPO stocks to buy and watch in 2021? Led by DocuSign (DOCU) and Pinterest (PINS), here’s a look at seven stocks that have gone public since 2018 and expect between 47% and 139% earnings growth this year.
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Dynatrace (DT), Futu (FUTU), ZoomInfo Technologies (ZI), SelectQuote (SLQT) and nLight (LASR) also make the list.
Built using MarketSmith, the screen filters over 8,200 stocks in the IBD database for only those companies that meet the criteria listed below.
DOCU, PINS and all the IPO stocks on this screen must:
- Have gone public since 2018.
- Trade 200,000+ shares per day on average.
- Be less than 15% below their 52-week highs.
- Have sales growth above 25% last quarter.
- Earn a Composite Rating above 80.
Stock Checkup requires a Composite Rating of 95 or higher to earn a passing grade. But newer IPO stocks sometimes have not been trading on the stock market long enough — or lag on other metrics — to meet that benchmark. While shares of nLight, SelectQuote and ZoomInfo stock come up short, they have other characteristics that make them worth watching.
Take LASR stock as an example. The developer of high-power semiconductor and fiber lasers was featured as the Stock Of The Day on Dec. 2 just as it was breaking out of a chart pattern. The company has posted five quarters of accelerating sales growth, including a 53% spike in Q4.
NLight has also flashed signs of accelerating EPS growth over the past two quarters. Analysts expect LASR stock to deliver 129% earnings growth in 2021.
Top IPOs Near Buy Points
While several of the leading IPOs on this screen, such as FUTU stock and PINS stock are extended following their latest breakouts, others are in or near new buy zones.
Out of buy range or not, PINS, DOCU, FUTU, DT, LASR and SLQT have all secured placement on IPO Leaders. Dynatrace is also on the IBD 50, while Pinterest is also on the IBD Big Cap 20.
DocuSign
DOCU stock tops this screen, with consensus analyst estimates calling for 169% earnings growth in 2021. Over the past three years, DocuSign has generated average annual EPS growth of 274% and average yearly revenue gains of 39% during the same period.
After retreating from a new high in September, DOCU stock has been trading along its 10-week moving average. The essentially sideways movement in the relative strength line shows how the stock has been more or less mirroring the S&P 500 since July.
Look for DocuSign to finish digesting its huge gains since September 2019 and clear its latest 263.10 buy point.
ZoomInfo
ZoomInfo is still in buy range after clearing a 53.18 entry from a cup-shaped base. The buy zone extends to 53.84.
The enterprise software firm provides solutions for sales and marketing teams. While analysts are looking for 47% earnings growth in 2021, the company faces a more immediate test when it reports Q4 and 2020 earnings on Feb. 22.
Analysts expect a whopping 1,100% EPS gain in Q4 and a 256% gain for the year.
Top IPOs Expecting 47% To 139% EPS Growth In 2021
| Company | Symbol | EPS Est Next Yr % | Sales % Chg Lst Qtr | Comp Rating | RS Rating | EPS Rating | SMR Rating |
|---|---|---|---|---|---|---|---|
| DocuSign Inc | DOCU | 139 | 53 | 97 | 83 | 84 | A |
| nLight Inc | LASR | 129 | 53 | 81 | 83 | 38 | C |
| Dynatrace Inc | DT | 103 | 28 | 98 | 73 | 98 | A |
| Pinterest Inc Cl A | PINS | 100 | 76 | 99 | 95 | 84 | A |
| Selectquote Inc | SLQT | 83 | 103 | 89 | 55 | 80 | A |
| Futu Holdings Cl A Ads | FUTU | 59 | 276 | 99 | 99 | 84 | A |
| Zoominfo Techs Cl A | ZI | 47 | 56 | 81 | 74 | 80 | NA |
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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