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5 Best-Performing IPOs of 2018

Nitish Marwah
M&T Bank's (MTB) Q4 earnings benefit from higher revenues. However, deteriorated credit quality and higher expenses offset the gains.

This year was good time to raise funds and such is evident from a surprisingly high number of initial public offerings (IPOs) this year. By all means and purposes, it wouldn’t be wrong to say that 2018 was a banner year for IPOs. As a matter of fact, Renaissance Capital estimates that this year has been the strongest for IPOs since 2014. Approximately $46.8 billion was generated in deal proceeds from 190 IPOs that occurred in 2018.

Strong economic fundamentals and increased foreign investment have led to such a high number of companies going public. This apart, foreign investment in U.S. biotech is estimated to rise to $2 billion in 2018. Such a humongous influx of funds is expected to further catalyze the process of drug innovation.

US Economy Expected to Remain Robust

The Federal Reserve estimated that the U.S. economy will grow 3% and 2.3% in 2018 and 2019, respectively. Also, core PCE inflation rate has been projected at 1.9% in 2018, whereas the metric is estimated to rise to 2% in 2019. The U.S. economy has also benefited this year from a steady rise in consumer spending, improvements in labor market, higher consumer confidence and rise in wages.

Finally, the unemployment rate has been kept unchanged at 3.7% and 3.5% for 2018 and 2019, respectively. Such broadly encouraging conditions have historically improved business confidence and a higher number of companies going public is a reflection of such sentiments.

IPOs Take Center Stage in 2018

Per IPO ETF manager Renaissance Capital, 2018 witnessed a 19% higher number of IPOs this year compared to 2017. Further, the amount of capital raised surged 32% year over year in 2018. Also, the median deal size this year remained around $108 million.

There were about 76 healthcare IPOs in 2018. Coming to the average return from IPOs this year, healthcare IPOs posted an average return of 8.9% on total proceeds worth $9.1 billion. Meanwhile, the tech sector witnessed the second-highest number of IPOs. With 52 IPOs under its belt, the tech sector posted an average return of 8.1% from total proceeds worth $18.4 billion.

Meanwhile, a number of firms raised extraordinarily large funds this year. There were about 10 firms which raised a minimum of $1 billion in IPOs this year. AXA Equitable Holdings Inc EQH led the pack with $2.75 billion it raised in its IPO in May this year.

Further, a total of 44 IPOs were private equity backed, raising $16 billion — the highest amount raised in the last four year. On the other hand, venture capitalists backed about 87 IPOs this year, raising $15 billion in total funding.

5 Best IPOs of 2018

Judicious policy making within the country, strong economic fundamentals and higher confidence in the economy have resulted in an increased number of companies going public this year. This biggest stimulus has come from foreign investments in domestic companies.

This momentum is largely expected to continue in 2019. As a matter of fact, some of the big names from tech such as Uber, Lyft and Pinterest are expected to go public next year. Let us now look at some of the best IPOs of this year.

BJ's Wholesale Club Holdings, Inc. BJ

The company is the owner and operator of a warehouse club on the East Coast of the United States. The company offers perishable, edible grocery, general merchandise and non-edible grocery products.

The company is based out of Westborough, MA and carries a Zacks Rank #2 (Buy). The company conducted its IPO on NYSE in June. Shares of the company have witnessed growth of 33% so far since it went public. The total IPO size was $733.13 million at $17 a share.

Americold Realty Trust COLD

The company is the owner and operator of 156 temperature-controlled warehouses in the United States as well as across the globe.

The company is based out of Atlanta, GA and carries a Zacks Rank #2 (Buy). The company conducted its IPO on NYSE in January. Shares of the company have witnessed growth of 14.5% so far since it went public. The total IPO size was $724.8 million at $16 a share.

Tilray, Inc. TLRY

The company is engaged in the research, cultivation, processing and distribution of medical cannabis.

The company is based out of Nanaimo, Canada and has a Zacks Rank #4 (Sell). Touted as one of the best IPOs this year, the company conducted its IPO on Nasdaq in July. Shares of the company have witnessed growth of 152% so far since it went public.

The total IPO size was $153 million at $17 a share. Also, the stock surged more than 850% by the end of September. However, the biggest challenge for the stock was low availability of its shares as well as low market cap of only $7 billion.

Kiniksa Pharmaceuticals, Ltd. KNSA

The company operates as a clinical-stage biopharmaceutical company and is engaged in discovering, acquiring and developing therapeutic medicines for patients suffering from debilitating diseases.

The company is based out of Hamilton, Bermuda and carries a Zacks Rank #3 (Hold). The company conducted its IPO on Nasdaq in May. Shares of the company have witnessed a growth of 29.4% so far since it went public. The total IPO size was $153 million at $19 a share.

Allakos Inc. ALLK

The company operates as a clinical-stage biopharmaceutical company and is engaged in the development of therapeutic antibodies for the treatment of allergic, inflammatory and proliferative diseases.

The company is based out of San Carlos, CA and has a Zacks Rank #3 (Hold). The company conducted its IPO on Nasdaq in July. Shares of the company have witnessed growth of 52.9% so far since it went public. The total IPO size was $127.8 million at $18 a share.

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

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BJ's Wholesale Club Holdings, Inc. (BJ) : Free Stock Analysis Report
 
AXA Equitable Holdings, Inc. (EQH) : Free Stock Analysis Report
 
Allakos Inc. (ALLK) : Free Stock Analysis Report
 
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