Quick Take: Questions on Housing-Related IPOs
Take American Homes 4 Rent, a type of real estate investment trust that has had limited success in 2013. The company has filed for a $750 million offering size in the range of $16 to $18 per share and expects to trade under the ticker symbol, "AMH."
Gaskins said he's not really loving this one because of the poor performance of other stocks already in the sector. He added there appears to be a mistake in the company's SEC filing -- something he never likes to see -- with the capitalization being higher than the price-to-tangible-book value, which it should never be.
The second IPO is Control4 Corporation and again, Gaskins doesn't care for its prospects. The IPO has an offering size of $65 million, with shares in the $14.50 to $16.50 range and the company plans to trade under the ticker symbol, "CTRL."
Control4 sells equipment for homeowners that allow them to control security systems, lighting, heating and other features remotely away from home. While top-line growth was recently as high as 20%, Gaskins said the company has not been able to reach profitability.
Although the June quarter shows estimates for a $1.5 million gain, its pre-taxed income would give the company a PE ratio of 60. Gaskins concluded that one quarter does not represent consistency and that this is one to watch, but not buy.
-- Written by Bret Kenwell in Petoskey, Mich.