Safe IPOs Start to Flow Back to Market

Caution continues to be the name of the IPO game, as evidenced by this week's stock offerings.

New issues for the week include auto insurer Direct General(DRCT Quote), which began trading on Tuesday, real estate investment trust Gladstone Commercial, government services provider Providence Services and regional bank Texas Capital Bancshares.

Each of the firms -- which represent some of the steadier industries in a still-shaky economy -- was recently profitable, according to Securities and Exchange Commission filings.

Three years after the collapse of the stock market bubble, investors remain very reluctant to take on IPOs with risk attached to them. "You are getting deals from insurers and reinsurers. They are good for safety," said Jeffrey Hirschkorn, a senior analyst at IPO Monitor.

Direct General's IPO follows a well-received offering from auto insurer Infinity Property & Casualty(IPCC Quote) in February.

On Monday, Direct General sold 6.93 million shares at the top of its proposed range of $19 to $21 a share to raise $145.6 million. The stock was lately higher $2.96, or 14.1%, to $24 on its first day.

Notably, Keefe, Bruyette & Woods, a New York bank focused on the financial services sector, was the lead manager on the deal. "You are seeing a diversification in underwriters," said Hirschkorn. "People are looking to regional investment banks for security."