Facebook Flop Cast a Pall Over IPO Markets

NEW YORK (TheStreet) -- The past year has been a ripe environment for initial public offerings; certainly the Facebook (FB) IPO in May brought with it fervor for new issues that we had not seen in quite some time. Of course, once Facebook did not take off for the stratosphere, as many hoped that it would, a pall of sorts was cast over the IPO markets.

In fact, Facebook now trades 47% below its IPO price, and is facing two more lockup expirations, tomorrow and Dec. 14, which combined, could put another 1.2 billion shares into the float. We could see some interesting days ahead for this name.

But while Facebook garnered the bulk of the attention in IPO land, not all recent offerings have crashed and burned. In July, discount retailer Five Below Five Below ( FIVE), went public at $17 per share, and is up about 75% from the IPO price, making it the third-best performing new issue in the past 6 months. That's despite pulling back from the $40 range in late September. While I like the concept, and the stores are very popular in my household, this entire story is predicated on growth from the current 226 stores, to 2,000 stores.

Consensus estimates are calling for earnings to begin ramping up, and the stock currently trades for about 44 times 2014 consensus estimates. While too rich for this value investor's blood, I will be following the story because I believe this is one of the most interesting concepts in discount retailing. The question is whether the growth, much of which appears to be priced in, and earnings will follow.

FIVE Chart FIVE data by YCharts

Other winning IPOs in the past six months include cloud-based solutions company Workday ( WDAY), which is up nearly 70% from its $28 IPO price. Shares began trading last month, and are actually down a couple of percent from the opening price of $48.05, once again proving that IPOs can be lucrative, if you can actually get shares at the IPO price.

Shares of Chuy's Holdings ( CHUY) which operate a chain of Mexican restaurants are up 62% since debuting in July. That's despite falling 25% since July. Chuy's shares currently trade for about 32 times 2013 consensus estimates, also too rich for my blood. This chain is very small at this point with 37 locations, and not likely to give Chipotle ( CMG) a run for their money in the near future.

CHUY Chart CHUY data by YCharts

Not surprisingly, Facebook sits at top of the worst performers list for the past six months. Excluding companies with market capitalizations below $100 million, the next worst performer is Dubai based specialty rice company Amira Natural Foods ( ANFI), which was founded in 1915, and later became India's largest privately held rice company. Amira shares are down 23.5% since debuting last month at $10. This one is interesting on the surface, but I need to do some more digging.

Shares of packaging name Berry Plastics Group ( BERY), which also went public last month, are down 13% since their debut. Berry is a $1.5 billion market cap company, with a considerable amount of debt; more than $4 billion. A laundry list of firms, including BofA/Merrill, Goldman, Citigroup, and Deutsche Bank initiated coverage of Berry this morning with buy ratings; but that debt load is a bit too hefty for me.

Stay tuned.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.

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