3 Likely IPOs You Should Watch for in 2014

2013 was a banner year for IPOs — the best since 2000. A total of 222 companies IPO’d, raising $54.9 billion — a figure 29 percent higher than in 2012, according to data from Renaissance Capital.

Although the public offerings of Twitter (TWTR), Hilton Worldwide (HLT), and The Container Store (TCS) stole many of the headlines, the biggest winners came from lesser-known companies like Insys Therapeutics (INSY), GW Pharmaceuticals (GWPH), and ExOne (XONE) — up 384 percent, 367 percent, and 236 percent, respectively, since they went on the public markets.

Many experts are predicting that 2014 IPOs will enjoy similarly impressive gains. Here are three companies that — thanks to their size, following, and innovation — all stand to be big winners if they do in fact IPO in 2014 as expected.

Alibaba: China’s Amazon.com

The first company is Alibaba, an e-commerce giant from Hangzhou, China. According to The New York Times, Alibaba had 2012 revenue of $160 billion — nearly twice as much as Amazon.com (AMZN) posted in the same year.

Although the company’s business focuses on online shopping in China (where consumers shop online 62 percent more than even in the U.S. each month, according to research from PricewaterhouseCoopers), there are suspicions that an IPO would help fund brick-and-mortar stores — as well as permit global expansion.

If Alibaba does IPO, it would likely be the largest IPO ever, according to Nasdaq.com. And it would strongly benefit shareholders of the Japanese company SoftBank and Yahoo (YHOO), which own 36.7 percent and 24 percent of the company, respectively.

GoPro: A Camera Company Ready for Its Closeup

The second company you might know thanks to the proliferation of YouTube videos its products have made possible.

GoPro makes high-definition digital video cameras designed for extreme conditions. They’ve been strapped onto bodies, helmets, and all-terrain vehicles to document breathtaking surfs, snowboarding jumps, and dune buggy runs.

The best part (from a potential investor’s perspective) is that this company is primarily marketed in a viral manner — for free. Customers enthusiastically share their enjoyment of the device with other potential customers, and the YouTube videos they share serve to educate the uninitiated. (Engadget writes that the company has simultaneously been “creating a media empire.”)

This huge following, as well as the fact that the company is already profitable (something that’s not always a given with IPOs), means that early investors in GoPro could be in for a historic journey.

Lending Club: Bringing Unconventional Banking to the Masses

The third company, Lending Club, began the year “check[ing] off items on [its] IPO-readiness list,” according to The Wall Street Journal. It’s a peer-to-peer lending platform that was founded right about the same time that many conventional banks were failing.

Lending Club allows everyday investors to loan money directly to everyday borrowers.

It’s a good deal for the lenders because the interest rates are often higher than those they would receive by investing in bonds or other traditional savings vehicles. And it’s a good deal for the borrowers because the interest rates are often lower than they’d be charged by a conventional bank based solely on their credit ratings. Lending Club makes its money by taking an up-front fee from the borrower, and then small regular service fees from investors.

Although the company’s CEO admits that an IPO would be more a marketing tactic than a necessary tool to fund expansion, there’s no denying that unconventional, innovative new ways of banking are clearly in demand. And Lending Club sits at the forefront of this industrywide shift.

Look Before You Leap

Of course, investors should always be cautious when buying an IPO. Sometimes the hype before a public offering drives up the share price to inflated levels. For example, it took investors in Facebook’s IPO more than a year to see a gain.

So although these companies are solid contenders to consider (and could make strong long-term investments), remember that a buy decision should be based on a reasonable valuation.

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