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The Return of the IPO Pop

The names Shanda Interactive (SNDA), eCost.com (ECST), 51Job Inc. (JOBS - Get Report) and Cogent Systems (COGT) didn't mean a whole lot to investors this time last year.

Today, they're some of the hottest companies on Wall Street, heralding a renaissance in the recently moribund IPO market -- if not a reprise of the late 1990s.

After going public early in 2004, these stocks have jumped an average of 220%, easily beating the Nasdaq's performance over the same period.

Other tech-related offerings like Interchange (INCX) and Volterra Semiconductor (VLTR) have also ridden the wave of momentum, posting gains reminiscent of late 1999 and early 2000.

"There is a certain amount of speculation that has crept in toward the end of the year," said Paul Bard, an IPO analyst at Renaissance Capital.

Indeed, valuations are skyrocketing, with Cogent, Volterra and 51Job all trading at more than 15 times sales. In the most recent quarter, eCost actually lost money and the stock now sports a price-to-earnings ratio of 182 based on next year's profit estimates.

If there's an IPO bubble today, though, analysts say it's nothing like the one that existed four years ago.

"What you saw back then were concept companies going public, with no revenues, millions in losses and a lot of hand-clapping," said John Fitzgibbon, IPO analyst at 123Jump. "The deals that we've seen come public this year are vastly different to those that we witnessed during the days of the insanity dot-com boom."

While Volterra's multiple is extremely high, the company did report a 99% increase in revenue during the third quarter while net income increased to $1.5 million from a loss of $800,000 the year before.

At Shanda, a provider of online games in China, sales rose 133% in the three months ended September while net income increased 111%. Paid-search provider Interchange and Chinese human resources company 51Job have also reported stellar growth while biometrics firm Cogent has seen business improve, too.
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