New Companies Are Leading the Market in the New Year

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Last year was a busy year for initial public offerings, and several of those new names are rallying in 2019.

A list of 37 recent IPOs generated an average gain of more than 9 percent since the start of January. That’s more than twice the gain of the broader S&P 500 over the same period. Prominent leaders include cannabis stock Tilray (TLRY) and Chinese streaming-video provider Iqiyi (IQ).

TradeStation’s Scanner generated the list with a few simple criteria. First, it eliminated companies valued at less than $1 billion and averaging fewer than 500,000 shares of daily volume. A custom indicator then found stocks with 100 to 250 days of price history, which essentially singled out recent IPOs.

(This scan only required two lines of Easy Language. It will be covered, along with plenty of other indicators, on a January 22 webinar about finding new leadership areas in 2019.)

The list includes other Chinese technology names aside from IQ. Video-game developer Huya (HUYA) has rallied more than 30 percent in 2019 and e-commerce platform Pinduoduo (PDD) is up 16 percent. Neither seem to have any news explaining their rallies, although foreign stocks have benefited from a weak-dollar trend this year.

There’s also been a hunt for new areas of growth after several prominent technology companies ran out of momentum in 2018. Several recent IPOs may also satisfy investors’ hunger for innovators and disruptors. Consider these:

  • Pagseguro (PAGS): A Brazilian electronic-payment provider with its top line expanding about 50 percent year over year.
  • Zscaler (ZS): The cloud-computing security stock has grown revenue 60 percent in the last year. Its first three earnings reports as a public company have beaten estimates.
  • Bilibili (BILI): A Chinese online-media company whose sales climbed about 50 percent in the last quarter.
  • Pluralsight (PS): The heavily shorted provider of online education services with revenue growth of more than 40 percent.
  • Docusign (DOCU) and Dropbox (DBX): These cloud-based collaboration stocks are growing 25-35 percent. Both struggled after their IPOs but have bounced about 9 percent so far this year.

In conclusion, money continues to shift into different parts of the market as 2019 progresses. Traders looking for new areas of leadership may want to follow some of these companies as they transition from IPOs to more established names. Who knows, some might even get added to indexes before terribly long.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.