) --

Initial public offerings in 2009 were a tale of two drastically different worlds.

The year started at a snail's-pace for all the obvious reasons, with no deals whatsoever coming to market until February. Even then, a mere 14 IPOs were completed in the first half of the year.

But by the fall, the market had regained speed. In particular, October and November were stellar months, both seeing double-digit deals. In terms of the sheer volume of IPOs, the fourth quarter alone is on track to beat the rest of the year combined.

By the end of 2009, 63 companies had gone to market this year. That compared with 31 total deals in 2008. "We are now back to a normally functioning IPO market," says Bill Buhr, IPO strategist at Morningstar.

(One interesting note: The top three IPOs of 2009, as measured by stock returns, came from China. This isn't surprising, considering that investors are looking for growth, says Eric Guja, research analyst at Renaissance Capital -- and China is, of course, where today's growth is.)

Buhr says this momentum should extend into the New Year -- although any volatility in the markets could stymie deals. And although there are no blockbuster deals in the pipeline, there are many are solid companies. "These aren't sexy names," Tim Walker, industry expert at Hoover's, says. "They are coming to the market in a reasonable manner, at a fair price and are being bought at rational premiums."

With this as a background, we present the Top Five IPOs of 2009, in terms of stock performance. Each merits attention moving into 2010 -- and offers insight to which new offerings might break-out in the coming year.

Lihua International

Lihua International


, the Chinese maker of copper-clad aluminum wire and recycled scrap copper wire (the cheaper version of pure copper wire) used in consumer electronics, white goods, automotive, utility, telecommunications and specialty cable industries, came to the market at just $4 a share. But since Lihua International's IPO on September 8, the stock has soared 165.5% to close at $10.62 on Jan. 4.

In November, the company announced that it swung to a loss of $1.3 million, or 8 cents a share, in its third quarter, although its sales nearly tripled.

Most of the loss was the result of a non-cash charge for the change in the fair value of warrants issued to investors in conjunction with the company's issuance of convertible preferred stock in October 2008. Excluding the charge, Lihua actually earned $6.7 million, or 39 cents a share.

Sales grew to $40.9 million from $14.3 million in the year prior.

Duoyuan Global Water

With a shortage of clean water in China, there is significant demand in Beijing-based water-treatment-and-processing company

Duoyuan Global Water

( DGW).

The proof of this investor interest came right after the company began trading on the New York Stock Exchange on June 24. Priced at $16 a share, topping its expected range between $13 and $15, it soared nearly 40% in its first day on the market.

That energy hasn't waned. Over the course of the half year since its debut, Duoyuan Global Water has spiked 134% to close at $37.49 on Jan. 4.

The China Association of Environmental Protection Industry estimates that circulating water treatment, purification and wastewater treatment equipment will become an $18 billion industry by 2010. With sales of only $87 million in 2008, Duoyuan has substantial room to grow, according to Morningstar.

"Because China lagged developed countries in water-treatment needs, Duoyuan was able to offer products that meet domestic demand, but might be too low-end for multinational companies to have a technological edge on," Morningstar said in a note.

Water-treatment giants like

General Electric

(GE) - Get Report

have been unsuccessful at penetrating the Chinese market.

China may be in short supply of clean water, but not of online games.

Chinese gaming publisher

(CYOU) - Get Report

was the second-most successful IPO in terms of stock returns in 2009. Spun off by parent company,'s stock has spiked 120.7% since it came to market April 2, to close on Jan. 4 at $35.31. priced shares at $16, ahead of its expected price of $14 a share, to rake in $120 million. "It was an attractive deal compared with other companies in the space," Eric Guja, research analyst at Renaissance Capital, says.'s bread and butter is in the massive multiplayer online role-playing game

Tian Long Ba Bu

, which by the end of last year had 1.8 million active playing accounts.

While analysts fear will be unable to find success outside of this flagship title, the company launched its first game in the U.S. in November, and has three games in the works that will also be available in the states.

The market for Chinese online games has seen an annual growth of 40% over the past three years, and according to iResearch, a market research firm, it will expand 20% annually over the next five years.

In the third quarter, Changyou's revenue spiked 26% to $68.7 million.


Shanda Games'


IPO, however, has not been as successful. At $1 billion, Shanda Games was one of the most lucrative deals of the year, yet the stock has fallen 20% since it came to market on September 25.

The company, a subsidiary of

Shanda Interactive Entertainment

( SNDA), priced about 83.5 million shares at $12.50, at the top end of its expected range of $10.50 to $12.50, yet on its first day of trading shares fell as much as 14%.

Shanda Games ranks as one of the 10 worst IPOs of the year by returns.

Mead Johnson Nutrition

Mead Johnson Nutrition's


IPO was an anomaly, Walker says. As the first deal of 2009, investors were eager to grasp on to any good news coming out of the market.

"For this reason its weight is disproportionate to the rest of the group," Walker says. "It is similar to when


(V) - Get Report

came to market in 2008. Mead is a well-known name that already has market penetration."

A subsidiary of

Bristol-Myers Squibb

(BMY) - Get Report

, Mead Johnson Nutrition makes formula for infants, most notably under the name Enfamil, as well as nutrition products for children.

On February 11, the company offered 30 million shares at $24 apiece, to raise $720 million. Bristol-Myers said it spun off Mead to help accelerate its growth.

In the third quarter, earnings slid 5% to $97.6 million, due to weak sales in North America and Europe. As a result of the Mead's IPO, it now has more stock available, and its per-share profit tumbled 21% to 48 cents from 61 cents.

Excluding one-time costs and benefits, the company said it earned 53 cents a share. Revenue fell 6% to $699.8 million from $742.8 million.

Since its IPO, Mead's stock has soared 87.5% to close at $44.99 on Jan. 4. In the fall it announced that it will begin making powder infant formula, which should be available next year.

Last month, Bristol-Myers split off its holdings in the company. The stock swap allowed Bristol-Myers shareholders to exchange some, all or none of their shares for Mead stock tax-free and at a discount. For each $1 of Bristol-Myers stock swapped, shareholders received about $1.11 worth of Mead shares.



(SWI) - Get Report

, a Texas-based software maker that helps companies manage their networks, came to market on May 21 priced at $12.50 a share.

SolarWinds is appealing to small and mid-sized businesses since it is cheaper and easier to implement. Since it debuted on the NYSE, SolarWinds stock has gained 84.6% to $23.08 on Dec. 8.

"We think that the company can continue to grow with small- and medium-size businesses; however, we are skeptical of the company's ability to grow with larger enterprise customers due to much higher entry barriers," according to Morningstar.

Competitors like


(IBM) - Get Report



(HP) - Get Report


Cisco Systems

(CSCO) - Get Report

are expected to incorporate increased functionality into their software, which would reduce the need for SolarWinds' products.

SolarWinds quadrupled its sales in the past four years and still accounts for less than 2% of the total network management industry, according to Morningstar's estimates.

"Should SolarWinds continue to win business from small customers, its basic, low-cost software and high profitability may make it an ideal acquisition for a larger competitor looking to expand its offerings," according to Morningstar.

-- Reported by Jeanine Poggi in New York.

Follow on


and become a fan on


Copyright 2009 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.