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12 Best IPO Stocks To Buy Heading Into 2023

In this article, we will discuss the 12 Best IPO Stocks To Buy Heading Into 2023. You can skip our detailed industry analysis and go directly to the 5 Best IPO Stocks To Buy Heading Into 2023.

All companies require capital to operate. While some companies are sponsored by their owners, who keep investing their money into the business, others prefer taking loans from outside sources. Similarly, there is an interesting way for companies to raise capital to grow their business further, which is called an Initial Public Offering (IPO). In an IPO, the company asks for money from the general public in exchange for a stake in the company in terms of stocks. Investors are always looking out for IPOs as the company raising capital are often those that have the potential to grow at a fast pace, making money for their shareholders.

The market conditions in 2022 have been volatile and negative for retail investors. The high inflation environment, coupled with increasing interest rates, has slowed down the economy. However, shrewd investors are aware of the fact that it is in times of economic downturn when fortunes are made. In the current environment, many stocks are trading at less than half of what they were trading for a year ago. Hence, this provides an opportunity for long-term investors to start building a position in good stocks.

Renaissance Capital's IPO ETF holds the biggest and most widely traded newly-listed companies in the United States. The ETF tracks the Renaissance IPO Index, which is re-balanced every quarter to reflect the new additions to the market and remove the old holdings which don’t fit the criteria of the index. Some of the biggest holdings of Renaissance Capital's IPO ETF are Airbnb, Inc. (NASDAQ:ABNB), Snowflake Inc. (NYSE:SNOW), and Royalty Pharma plc (NASDAQ:RPRX).

Photo by Ruben Sukatendel on Unsplash

Our Methodology

We started with the holdings of Renaissance Capital's IPO ETF and ranked them using Insider Monkey's proprietary hedge fund sentiment scores. So, our list ranks the best IPO stocks to buy according to more than 900 hedge funds tracked by Insider Monkey. All of the stocks included in our list went public in the last 3 years.

12. Roblox Corporation (NYSE:RBLX)

Number of Hedge Fund Holders: 38

IPO Year: 2021

Based in San Mateo, California, Roblox Corporation (NYSE:RBLX) is a US-based video game developer. It is the developer of the popular game Roblox, which was released in 2006. Unlike other gaming companies that create new games, Roblox Corporation (NYSE:RBLX) is focused on improving and creating new features for this current game and is also developing new monetization tools for its developers instead of creating new games. The company is currently working towards creating a metaverse for the Roblox community with the goal of converting it from a casual game marketplace to life experiences such as meetings, concerts, education, etc.

On October 26, 2022, Franco Granda, an analyst at DA Davidson, initiated coverage of Roblox Corporation (NYSE:RBLX) with a Buy rating and a price target of $55. The analyst believes that the company will be able to win in mobile gaming owing to its user-friendly platform and cost efficiencies compared to its peers.

According to Insider Monkey’s database, 38 hedge funds had stakes in Roblox Corporation (NYSE:RBLX) at the end of the September quarter.  Renaissance Technologies remained the leading stakeholder of the company at the end of the third quarter.

In addition to Roblox Corporation (NYSE:RBLX), Snowflake Inc. (NYSE:SNOW), ZoomInfo Technologies Inc. (NASDAQ:ZI) and Bill.com Holdings, Inc. (NYSE:BILL) are included in our list of 12 best IPO stocks to buy heading into 2023.

In its Q4 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks, and Roblox Corporation (NYSE:RBLX) was one of them. Here is what the fund said:

Roblox Corporation (NYSE:RBLX) got significantly more attention from both institutional & retail investors after Facebook announced to rename itself as Meta Platforms. I believe the price appreciation is largely attributed to the increased attention. On the business side, Roblox rolled out a few successful music events and also partnered with Netflix on testing long-form media consumption in the virtual world. Apple in its iOS 14.5 rolled out an impactful change for the digital advertising landscape by requiring all apps to ask users to “opt-in”.

11. GitLab Inc. (NASDAQ:GTLB)

Number of Hedge Fund Holders: 40

IPO Year: 2021

Headquartered in San Francisco, California, US, GitLab Inc. (NASDAQ:GTLB) is an open-core tech company that operates a DevOps platform called GitLab. The company’s current focus is on expanding its principal market, which lies in the US, Europe, and Asia Pacific.

On November 29, 2022, Koji Ikeda, an analyst at BofA, increased his price target on GitLab Inc. (NASDAQ:GTLB) to $78 while keeping a Buy rating on the shares. According to a survey among 213 GitLab users, 55% of the users plan on spending more in the coming year, while 33% plan on spending less. The analyst believes that the survey results are bullish for the company, and there is still a low of room to grow.

As per Insider Monkey’s database, 40 hedge funds remained bullish on GitLab Inc. (NASDAQ:GTLB) at the end of Q3 2022. HMI Capital came out to be the biggest holder of the company’s shares at the end of the quarter.

GitLab Inc. (NASDAQ:GTLB) was discussed in the Q2 2022 investor letter of Baron Funds. Here’s what the firm said:

Shares of GitLab Inc., a leading software tools development platform, outperformed in the quarter after reporting strong quarterly results with 75% year-over-year revenue growth while raising annual guidance to over 58% growth. The results were driven by robust net new customer wins with base customers growing 64% year-over-year while existing customers continue expanding rapidly. We continue to believe GitLab’s easy-to-use and open development platform, combined with its disruptive pricing model, position the company well for continued market share gains.

10. Signify Health, Inc. (NYSE:SGFY)

Number of Hedge Fund Holders: 40

IPO Year: 2021

Signify Health, Inc. (NYSE:SGFY) is a technology company operating in the healthcare sector. The company capitalizes on advanced analytics and a network of nationwide healthcare providers to produce and run value-based payment programs. On September 5, 2022, CVS Health Corporation (NYSE:CVS) announced its intention to acquire Signify Health, Inc. (NYSE:SGFY) for $30.50 per share. The deal is currently under regulatory review.

On September 7, 2022, Elizabeth Anderson, an analyst at Evercore ISI, increased her price target on CVS Health Corporation (NYSE:CVS) to $125 while keeping an Outperform rating on the stock. The analyst updated her model after the company’s acquisition of Signify Health, Inc. (NYSE:SGFY), which she believes will be accretive to the company’s profitability.

40 hedge funds are currently bullish on Signify Health, Inc. (NYSE:SGFY) as per Insider Monkey’s database. Magnetar Capital had the leading stake in the company at the end of Q3 2022.

9. DoorDash, Inc. (NYSE:DASH)

Number of Hedge Fund Holders: 41

IPO Year: 2020

DoorDash, Inc. (NYSE:DASH) is an American-based food delivery company that operates through an online platform. The company was founded in 2013 and is headquartered in San Francisco. It went public in 2020 under the symbol DASH.

On November 7, 2022, Oppenheimer analyst Jason Helfstein upgraded his rating on DoorDash, Inc. (NYSE:DASH) to Outperform with a price target of $70. The analyst believes the company’s US restaurant margins will improve from 5.7% to 6.1% during 2020-2025. The international and US non-restaurant contribution margins are also forecasted to improve to -2.4% from -13.4%.

As per Insider Monkey’s proprietary database, 41 hedge funds were bullish on DoorDash, Inc. (NYSE:DASH), as of the end of the third quarter. Hillhouse Capital Management was the biggest stakeholder in the company’s stock at the end of Q3 2022.

8. KE Holdings Inc. (NYSE:BEKE)

Number of Hedge Fund Holders: 41

IPO Year: 2020

KE Holdings Inc. (NYSE:BEKE) provides housing services and transactions through both online and offline platforms. The company offers real estate financial solutions, old and new home sales, rentals, and other home-based services. KE Holdings Inc. (NYSE:BEKE) is based in China and conducts its business only in that region.

On October 28, 2022, Jiong Shao, an analyst at Barclays, increased his price target on KE Holdings Inc. (NYSE:BEKE) to $27 while keeping an Overweight rating on the stock. The analyst has made upward revisions to his earnings forecasts for China-based companies in his coverage.

As per Insider Monkey’s database, 41 hedge funds owned stakes in KE Holdings Inc. (NYSE:BEKE) at the end of the third quarter. CoreView Capital remained the leading stakeholder of the company at the end of Q3 2022.

Here is what Tao Value has to say about KE Holdings Inc. (NYSE:BEKE) in its Q3 2021 investor letter:

As witnessed in the past quarter, the government intervention in the Chinese private sector is elevated to an unprecedented level. Given this background, I thoroughly reviewed all our Chinese holdings and made a few changes. We exited KE holdings (ticker: BEKE), for high potential regulatory risk and the passing of the visionary founder & CEO Zuo Hui (who was a core tenet of our original thesis).

7. Procore Technologies, Inc. (NYSE:PCOR)

Number of Hedge Fund Holders: 43

IPO Year: 2021

Procore Technologies, Inc. (NYSE:PCOR) is a cloud-based provider of construction management software. Procore Technologies, Inc. (NYSE:PCOR) makes money by charging users for software products through subscriptions. The company’s products include Design Coordination, Project Financials, Field Productivity, BIM, Portfolio Financials, Invoice Management, Accounting Integrations, Capital Planning, and Analytics.

On October 31, 2022, Scotiabank analyst Nick Altmann started covering Procore Technologies, Inc. (NYSE:PCOR) with a price target of $55 and a Sector Perform rating. Although the analyst believes that the company’s market is still under-penetrated with a lot of room for growth, the company’s high valuation is keeping the analyst on the sideline for now.

As per Insider Monkey’s database, 43 funds remained bullish on the company at the end of Q3 2022. 12 West Capital Management had the biggest long position on the company’s shares at the end of the third quarter.

6. Peloton Interactive, Inc. (NASDAQ:PTON)

Number of Hedge Fund Holders: 45

IPO Year: 2019

Peloton Interactive, Inc. (NASDAQ:PTON) is an American-based media company that also runs an interactive exercise and fitness platform. The exercise equipment, such as stationary bicycles, treadmills, indoor rover equipment, etc, are connected to advanced technological devices with an internet connection through which the customers can acquire live and pre-recorded streams of fitness programs and classes through subscriptions.

On November 21, 2022, John Blackledge, an analyst at Cowen, reduced his price target on Peloton Interactive, Inc. (NASDAQ:PTON) to $12 from $14. The analyst also downgraded his rating on the stock to Market Perform from the previous Outperform owing to demand uncertainty and a challenging macro-environment.

However, the stock remains popular among the smart money. As per Insider Monkey’s database, 45 hedge funds had stakes in Peloton Interactive, Inc. (NASDAQ:PTON) at the end of the third quarter. Darsana Capital Partners remained the leading stakeholder in the company at the end of Q3 2022.

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Disclosure: None. 12 Best IPO Stocks To Buy Heading Into 2023 is originally published on Insider Monkey.