The term "new" is relevant in many areas of the stock market. The New Highs list, found daily in the Stock Lists tab at investors.com, is worth scanning to identify shifts in stock market leadership. Meanwhile, a company adapting to new conditions in its industry often results in strong stock performance. That's usually because of a new product or service that's driving strong bottom-line and top-line growth.
New issues, or recent IPOs, are also worth monitoring using the IPO Leaders screen. It's also accessible via the Stock Lists tab. Because it's in electronic format, the list is sortable by any column header. That means on any given day, you can see which new issues are up or down the most. The list can also be sorted by Composite Rating or volume percent change.
It makes sense to keep tabs on new issues because companies tend to show their strongest growth in the early stages of being a public company. Since earnings growth is one of the main drivers of a stock's price, it makes sense to focus on the big growers. The IPO Leaders screen on Thursday housed 10 names, eight of which showed triple-digit earnings growth in their latest reported quarter.
But an IPO should never be bought during the first few days of trading, even if it's soaring in price. At some point, the stock will pause and digest gains and form a short IPO base. Google consolidated for less than four weeks before blasting out of an IPO base in September 2004. More recently, CoreWeave soared out of an IPO earlier this year. The breakout was during the week ended May 16. The stock nearly tripled before it topped it June.
Stock Market IPO Leaders
The IPO Leaders appears every week in IBD Weekly, but the screen is updated daily at investors.com.
Figure Technology Solutions, which operates a blockchain based consumer lending platform, debuted earlier this month at 25. That was above an initial proposed range of 18-20 and also above an upwardly revised range of 20-22. Figure is one of the largest nonbank originators of home equity lines of credit.
In the second quarter, Figure showed earnings and revenue accelerated from the first quarter. Adjusted profit doubled to 14 cents a share, while revenue grew 31% to $106.1 million.
With a limited trading history, put Figure on a watchlist for now and let it develop a trading personality. One big positive is that Figure is trading nicely above its offer price of 25, even though the stock just pulled back 20% off its recent high. The latest pullback could be the start of an IPO base.
Follow Ken Shreve on X @IBD_KShreve for more stock market news and analysis.
