Quick Take: Consumer-Driven IPOs Are Not Created Equal
Diamond Resorts International will trade under DRII when its $264 million IPO comes to market. Gaskins says the stock is expensive based on some basic metrics, but it does have several positive catalysts. It does not have much competition in the timeshare space and does have nearly a half-million users that pay annual or monthly fees for points that can be redeemed at locations all around the world.
However, he warned, the consumer is the Achilles' heel, Gaskins said -- if spending, confidence or both rapidly slow, so will this business.
Unfortunately for RetailMeNot, which will trade under SALE, the prospects are worse. With a planned IPO of $191 million, Gaskins said this is one to avoid. "It looks like insiders are trying to bail out of this one, as well they should," he said, citing that a lot of the proceeds were going to insiders and towards past accumulated dividends.
Although the online company's top-line growth was explosive a couple of years ago, it's flat from the March quarter to the June estimates, which is a terrible sign, said Gaskins. Expenses also increased at a noticeable rate.
Finally, with homebuilders doing so well, UPC will likely be a name that investors want to get in when it comes public. The $125 million IPO, which will trade under UPC, will price shares between $15 and $17. But, according to Gaskins, only about half of the company's revenues comes from homebuilding.
The other half comes from property sales, where it bought 5,000 lots during the recession and is now selling them for large gains now that property values have appreciated.
The company may be trying to go public so it is bought out by a much bigger homebuilder for its properties, Gaskins concluded.
-- Written by Bret Kenwell in Petoskey, Mich.