For years, the initial public offering (IPO) market was strong and traders and investors made some serious money. Around the time the pandemic started in early 2020, the Special Purpose Acquisition Company (SPAC) market exploded and companies raised billions of dollars from investors. SPACs have existed for decades, but their popularity has soared in recent years. In 2020, 247 SPACs were created with $80 billion invested, and in 2021, there were a record 613 SPAC IPOs. By comparison, only 59 SPACs came to market in 2019, according to Investopedia.

All the excitement came to a grinding halt by late 2021 and that continued into 2022, which saw basically zero activity on either front all year. While there were plenty of companies looking to go public via the IPO route, with the market tumbling all of 2022, the demand was virtually nonexistent.

With a solid market rebound in 2023, the winds have shifted and some quality companies have been able to go through the IPO process and come out solid winners. Well, winners out of the gate, but the recent volatility in the markets and worries over an extended artificial intelligence technology rally took its toll on five huge deals, and savvy investors and traders are scooping up the shares at a discount, in some cases, to the initial offering prices.

While perhaps not suited for investors who are more conservative, the following five top stocks are exciting ideas for more aggressive growth investors with a higher risk tolerance and could bring some outsized returns over the next year. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Arm

This massive deal was a breakthrough as the European semiconductor giant returns as a public company. ARM Holdings PLC (NASDAQ: ARM) architects, develops and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers rely on to develop products.

It offers microprocessors, systems intellectual property (IP), graphics processing units, physical IP and associated systems IP, software, tools and other related services. Its products are used in various markets, such as automotive, computing infrastructure, consumer technologies and the Internet of Things. The company operates in the United States, China, Taiwan, South Korea, and elsewhere.

Arm, which supplies core technology to companies including Apple and Nvidia, priced its initial public offering at $51 a share. Shares quickly traded up to $69 in a frenzy not unlike those in past decades. However, the shares have backed up to just above the IPO price.

There is no published Wall Street consensus target for the company, and a few companies that were not in the deal have come out with so-so ratings. However, for investors willing to do some homework, this could be a long-term home run. The shares closed on Wednesday at $53.46, up close to 4% on the day.

This trendy food chain was solid out of the gate back in June and has also returned from the stratosphere. Cava Group Inc. (NYSE: CAVA) owns and operates a chain of Mediterranean restaurants. The company offers salads, dips, spreads, toppings and dressings. It sells its products through Whole Foods markets and grocery stores. The company also provides online food ordering services.

The stock was murdered back in August, dropping a stunning 22%. Economic concerns and lukewarm reactions to the company’s first earnings report were cited by some as the reasons behind the big selling momentum. This comes despite the fact that the company beat estimates in that initial report.

Piper Sandler has an Overweight rating and a $52 target price. The consensus target is $49.63. The shares closed trading on Wednesday at $31.26, up over 4% on the day.

Instacart

This company exploded during the pandemic and was trading at a much higher multiple before ultimately going public recently. Instacart (Maplebear Inc.) (NASDAQ: CART) does business as Instacart and provides online grocery shopping services to households in North America.

It sells and delivers a range of products, such as food, alcohol, consumer health, pet care and ready-made meals. The company offers its services through a mobile application and website. It also provides software-as-a-service solutions to retailers.

In September, 22 million shares were priced at $30 a share, and the stock opened trading at $42 for close to $10 billion market value. It has not seen that price level since. Instacart is currently the market leader among third-party grocery delivery companies, according to YipitData, a market research firm. But the company is facing growing competition from others, including DoorDash and Uber Eats. It also competes with big grocers like Walmart, which offer their own delivery.

Four firm that, again, were not in the deal have Hold or Neutral ratings on the stock, and there is no Wall Street consensus price objective yet, as those that were in the deal are still in the post-IPO quiet period. The last trade on Wednesday was reported at $27.31 a share, which was up close to 3% on the day.

Klaviyo

This top company has held on reasonably well since being priced and could be a huge steal for technology investors. Klaviyo Inc. (NYSE: KVYO) provides a software-as-a-service platform to enable its customers to send the right messages at the right time across email, short message service (SMS) and push notifications.
The company offers Klaviyo, a marketing automation platform that sends personalized and targeted messages. Its products include email marketing solutions to track every click and purchase to optimize campaigns; SMS, a text marketing solution for e-commerce growth and retention; and mobile push solution that reaches customers directly on their lock screen with mobile push notifications.

The company also provides Review solutions to get product reviews, as well as a customer data platform that helps store, analyze and use data at scale. It serves individuals, small and medium enterprises and companies in North America, Western Europe, Australia and elsewhere.

The company priced 19.2 million shares at $30 in late September, valuing the company at just over $9 billion on a fully diluted basis. Klaviyo, which Shopify owns 11% of, traded up to the $39 level before returning back to just above the IPO price. It has rallied some since and is offering investors a very solid entry point.

There is no coverage from Wall Street yet, but it is an excellent bet that the underwriters in the deal will have solid commentary and price targets well above the current trading level. The shares closed over 5% higher on Wednesday at $32.82.

Oddity Tech

This could very well be the home run of the entire group. Oddity Tech Ltd. (NASDAQ: ODD) operates as a consumer-tech company worldwide. It provides beauty and wellness products utilizing its PowerMatch technology. It builds and scales digital-first brands to disrupt the offline-dominated beauty and wellness industries.

The company offers products for face and complexion, eyes and brows, lips and skin care under the IL MAKIAGE brand, as well as hair and skin care products under the SpoiledChild brand.

This company went public back in July and exploded out of the gate after pricing 12.1 million shares at $35. The company finished the first day up 35% to close at $47.53, then traded up to $56 before nose-diving back to $25.81.

Oddity Tech co-founder and CEO, Oran Holtzman, noted earlier this week that the third quarter is expected to be the company’s strongest third quarter ever, exceeding its guidance and allowing Oddity Tech to deliver net revenue growth of at least 58% and adjusted EBITDA of at least $89 million in the first three quarters of 2023.

JMP Securities has a Market Outperform rating and a $66 target price, while the consensus target is $54.43. The stock was last seen Wednesday at $27.10, down 8% despite multiple upgrades across Wall Street.

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While the IPO market is still on somewhat shaky ground, the ability for Wall Street to package and get these deals sold shows that there is a growing demand for a market that Wall Street firms would love to see make a strong return. One difference between now and the past is that companies need to be in very solid shape financially to get a deal done, and all these recent deals do check that box. It is important to note that today’s action on four of the five stocks shows investors are very interested in owning these companies at lower entry points.

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