Upcoming IPOs to Watch: Fitness over Technology

upcoming ipoSo far this year, the restaurant sector has been the top area for upcoming initial public offerings (IPOs) to watch. This includes the sizzling surge in gourmet hamburger operator Shake Shack Inc. (NYSE/SHAK), which I continue to believe is vastly overpriced based on its underlying metrics. Once trading at $96.75 on May 22, the stock has fallen to $64.00 and trades at a mere 403x its 2016 earnings per share (EPS). While the company is planning to add chicken to its menu, the stock is priced like filet mignon.

Within the restaurant segment, there are also Bojangles’, Inc. (NASDAQ/BOJA) and Wingstop Inc. (NASDAQ/WING). Bojangles offers a southern-style menu that is interesting, but I’m not convinced it can catch on outside of its comfort zone. Wingstop obviously offers wings, but I’d rather stick with market-leader Buffalo Wild Wings Inc. (NASDAQ/BWLD) if that’s what you’re looking for.

The newest addition to the restaurant IPO menu was Brazilian steakhouse, Fogo de Chao, Inc. (NASDAQ/FOGO), which debuted at $20.00 on June 19, traded as high as $27.19, and currently trades at around $24.00. Like other U.S. steakhouse Ruth’s Hospitality Group Inc. (NASDAQ/RUTH), FOGO has good potential, especially as it can deliver on its ambitious plans for 100 new locations in the country.

Also Read: Top Five Upcoming IPOs to Watch For 2015

Some Upcoming IPOs to Watch 

The IPO market has been strong as reflected in the Renaissance IPO ETF (NYSEArca/IPO), which includes past IPOs such as Alibaba Group Holding Limited (NYSE/BABA), Twitter, Inc. (NYSE/TWTR), and Mobileye N.V. (NYSE/MBLY).

In the hot social media and Internet sector, IAC/InterActive Corp (NASDAQ/IACI), which has a slew of popular web sites worldwide attracting billions of eyeballs, is probably at the top of the list after announcing it would spin off its Match Group unit that includes popular dating site Match.com and dating app “Tinder.” The IPO is expected by the end of the year.

Renaissance ipo Chart

Chart courtesy of www.StockCharts.com

The proposed IPO would include only about 20% of the company, so IACI would retain full control. Given this, an interested investor could simply add IACI to their portfolio, as it’s relatively attractive for an Internet media stock, trading at 18.5x its 2016 EPS and a price/earnings to growth (PEG) of 1.76. Compare this to some of the high-flying social media and Internet stocks and you’ll understand the intrigue of IACI.

Another IPO that is garnering some stock market attention is Planet Fitness, which has filed a prospectus with the SEC to raise about $100 million. I like the look of this IPO, as the company has real numbers and makes money unlike many of the social media stocks. According to the prospectus, the fitness center operator had a massive network of 976 fitness centers spread across 47 states, Puerto Rico, and Canada; with 7.1 million members at the end of March.

Market watchers are also waiting for private car service operator Uber, which has a valuation in excess of $50.0 billion, and Pinterest, a social media platform where users can share pictures, which is currently valued around $10.0 billion.

Other Internet players that could debut either this year or next include cloud storage site DropBox and mobile payment system Square.

Happy IPO hunting!