by Tabitha Jean Naylor
The National Association of Securities Dealers Automated Quotations or NASDAQ is the premier stock exchange for startups because of its electronic securities trading mechanisms. Startup companies typically follow the model of finding funding from venture capital, building the company, then going public with an initial public offering (IPO) of stocks or selling the company. Most investors prefer that startups go public rather than sell because their shares in a successful company continue to produce income and there may be opportunities to grow if the enterprise continues.
The NASDAQ is the stock exchange of choice for many of these IPOs over its main competitor the New York Stock Exchange (NYSE). This is particularly true for technology based companies because the ethos of an electronic trading system is more attractive. This has been hotly contested by the NYSE in recent years, but many startups continue to prefer the NASDAQ. There have been reports from Hoovers Inc., showing that the average IPO on the NASDAQ performs twice as well as those on the NYSE.
Among the top ten IPOs that NASDAQ have singled out as most likely to grow in 2013 are Carlyle Group LP. Since its initial offering in May of 2012, its stock has grown 16 percent and is expected to produce year-end earnings of $3.06 per share for 2013. NASDAQ analysts predict that share prices could surge 64 percent in the coming year.
Another highly recommended stock is MRC Global, which produces valves, pipes and fittings for the energy industry. A general growth in the energy sector is expected to push demand for MRC Global products. The stock value has increased 15 percent since its IPO in April and is expected to reach another 28 percent within the coming year. This would yield a year-end dividend of $2.38 per share for 2013.
Oaktree Capital Group LLC is an investment management group that initially went public in April of 2012. Although, since then its stock has devalued by four percent, it is expected to produce a $4.83 dividend at the end of 2013. This would reflect a 38 percent increase in the dividends. This stock is particularly undervalued because its price to earnings peer group is 0.79 rather than the more appropriate 1.02 group.
A final recommendation by NASDAQ is PetroLogistics LP, which initially went public in May of 2012. PetroLogistics produces and distributes specialty chemicals like hydrogen and propylene to chemical and energy companies. Although its share prices have dropped 35 percent since its initial offering, it is expected to recoup those losses. Like Oaktree, this stock is vastly undervalued and is likely in the wrong price to earnings category. If it were in the P/E ratio of 13 instead of the 11 group, its stock would have risen 15 percent.
Startups who go public often face uncertainty from investors, which can contribute to lower stock prices. Choosing IPO shares often requires patience and careful consideration.
Tabitha Jean Naylor is a self-described digital marketing machine and certified Inbound Marketing Consultant with close to a decade of experience in both B2B and B2C markets. Her knowledge of how sales, marketing and great content go hand-in-hand has resulted in a variety of successful campaigns for start-ups through NASDAQ traded companies. She holds dual bachelordegrees in Political Science and International Business from West Virginia University, where she graduated magna cum laude.