Last year was the rebirth of the initial public offering, and the momentum looks to be carrying into 2021 as well. Some of the most highly anticipated companies came to the public markets, and while most have shown sparkling gains, they have been trading long enough to have had some of the weaker holders exit while the so-called smart money and long-term holders have looked for pullbacks to add to positions.

We screened our 24/7 Wall St. research database looking for the recent top IPOs that still look like outstanding stock to own for years to come. We found five top ideas that, while not cheap, may offer patient investors some huge upside in the next 12 to 18 months. While all five are rated Buy at major Wall Street firms, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
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Airbnb

Increasingly, travelers domestically and overseas have turned to this company to find comfortable lodging at all price points. Airbnb Inc. (NASDAQ: ABNB) operates a platform for stays and experiences to guests worldwide. The company’s marketplace model connects hosts and guests online or through mobile devices to book spaces and experiences. It primarily offers private rooms and luxury villas. The company was formerly known as AirBed & Breakfast and changed its name in November 2010.

The stock was a parabolic winner out of the gate last month, and while it backed off some, it still offers investors an opportunity to scale in funds and start acquiring shares to build a position. Jefferies is very positive and noted this in a recent report:

In our view, Airbnb is a best-in-class asset with a powerful brand and solid organic growth and we believe it is a key reopening play in travel and a core investment in growth tech portfolios. We pointed out that with COVID-19 taking a heavier toll on Airbnb’s competitors, we think the company has an opportunity to gain market share, riding an exceptionally strong brand name and several new use cases unlocked by the pandemic. We noted that the company was on a nice growth trajectory before COVID-19, and we model a return to 2019 bookings and revenue levels by the second half of 2021 and continued double-digit growth through 2025. Trading at 16x 2022 net revenue, we think it is justified Airbnb trades at a premium to innovative market leaders given margin potential and best fundamentals in travel.

Jefferies has a $170 price target for the shares, and the Wall Street consensus target is just $156.31. Airbnb stock closed above that level on Tuesday, at $179.17 a share.

This company was founded by Wall Street and Silicon Valley legend Tom Siebel. C3.AI Inc. (NYSE: AI) operates as an enterprise artificial intelligence (AI) software company. It provides software-as-a-service applications for enterprises. Its software solutions include C3 AI Suite, a platform-as-a-service application development and runtime environment that enables customers to design, develop and deploy enterprise AI applications. Its C3 AI Applications include industry-specific and application-specific turnkey AI solutions.
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The company’s C3 AI applications include C3 AI Inventory Optimization, a solution to optimize raw material, in-process and finished goods inventory levels. Its C3 AI Supply Network Risk provides visibility into risks of disruption throughout the supply chain operations for enterprise supply chain managers. C3 AI Customer Churn Management enables account executives and relationship managers to monitor customer satisfaction using transactional, behavioral and contextual information, as well as to take action to prevent customer churn with AI-based and human-interpretable predictions and warning. C3 AI Production Schedule Optimization is a solution for scheduling production, and C3 AI Predictive Maintenance provides insight into asset risk to maintenance planners and equipment operators. it also offers C3 AI Fraud Detection solution and C3 AI Energy Management solution.

The Wedbush price target is a massive $200, while the consensus target is much lower at $147.22. The shares were last seen on Tuesday trading at $146.88.

Context Logic

This one plummeted after its IPO but has staged a huge snapback rally. Context Logic Inc. (NASDAQ: WISH) is a valued focused, mobile centric, e-commerce marketplace targeting over a billion households with annual incomes less than $75,000 (excluding China and India).

Wish also partners with over 50,000 brick and mortar stores for its Wish Local pickup service. Wish’s largest categories in terms of units sold include fashion, accessories and hobbies. As of the third quarter of last year, Wish generated close to 50% of revenue from Europe, 40% from North America, 5% from South America and the rest from Asia and the rest of the world.

The $30 JPMorgan price target compares with a $26.00 consensus target and Tuesday’s closing share price of $29.15.

The COVID-19 pandemic jump-started the food delivery trend, and this sizzling company has hardly looked back since the IPO. DoorDash Inc. (NYSE: DASH) operates a logistics platform that connects merchants, consumers and dashers in the United States and internationally. The company was formerly known as Palo Alto Delivery and changed its name in 2015.
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It operates DoorDash marketplace, which provides an array of services that enable merchants to solve mission-critical challenges, such as customer acquisition, delivery, insights and analytics, merchandising, payment processing and customer support. It and offers DoorDash Drive, a white-label logistics service.

The DashPass subscription has reached 5million subscribers, leading to industry-leading customer retention. DoorDash has a wide range of national chain partnerships, with 175 of the 200 largest U.S. restaurant brands on the platform, leading to a competitive advantage in restaurant selection in suburbs.

JMP Securities has set a $185 price target. The consensus target is $170.38, and DoorDash stock closed above both levels on Tuesday at $182.53, even after retreating almost 5% for the day.

PubMatic

This company had another explosive IPO that blew up out of the gate, traded higher and has come back in some. PubMatic Inc. (NASDAQ: PUBM) provides a cloud infrastructure platform that enables real-time programmatic advertising transactions worldwide. The company’s solutions include PubMatic Cloud, which offers a customizable platform as a service to deliver a proprietary solution; openwrap and openwrap OTT, the Prebid-powered header bidding solution; openwrap SDK, which is an in-app header bidding technology; and media buyer console.

PubMatic also provides RTB advertising technologies, digital advertising inventory and real-time creative scanning for ads. Furthermore, the company offers audience encore for audience data transaction, and cross-platform video for multi-integration support for video bidding. Its platform supports an array of ad formats and digital device types, including mobile app, mobile web, desktop, display, video, over-the-top, connected television and media.

Jefferies has among the highest price targets on Wall Street and said this:

We view PubMatic as an ad tech winner with multiple drivers including the shift to programmatic advertising, buyers consolidating spend around fewer supply-side players, and growth in new verticals like Connected TV. We believe 20%+ revenue growth over the next 2 years is achievable and could be conservative. We also believe the company can achieve 25%+ EBITDA margins in 2021 with CTV as an upside call option. Further, at 8.9x 2021 revenue we believe the valuation looks compelling as the company trades at a 39% discount to its closest peer despite better growth and profitability.

The $38 Jefferies price objective should be going much higher soon. The consensus target price is $35, which is well below Tuesday’s closing print of $45.72.

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These five top stocks have exploded higher, but given their short trading life, they may have a long way to go. Almost undoubtedly, there will be some backing and filling in the shares prices. Long-term investors with a high risk tolerance that like these companies’ stories should scale buy shares over a three-month or so period looking for price dips.

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