Stock Market

It’s official. One of the hot IPOs of 2023 has priced its initial public offering. 

On Wednesday, Sept. 13, Arm Holdings (NASDAQ:ARM) got the last laugh. The U.K.-based chip designer originally sold itself to Nvidia (NASDAQ:NVDA) in 2022 for $40 billion, but regulators nixed the deal. Its shares were priced at $52 for a market capitalization of $55 billion, 38% higher than what Nvidia was prepared to pay, and higher than the high-end of its pricing range. 

In the meantime, Arm is valued at 106x earnings, an unbelievable premium to others in the chip industry. 

IPOs are trying to make a comeback in the U.S. However, despite Arm’s big haul, they’ve got a lot of work to do in the final three-and-a-half months if they want to match the 181 completed in 2022.

With interest rising, let’s examine three recent or upcoming IPOs to buy. Each of them will have taken place in the past three months.

Birkenstock Holding (BIRK)

Source: It for you / Shutterstock.com

On Sept. 12, Birkenstock Holding (NYSE:BIRK) filed its F-1 registration statement for foreign private issuers with the SEC. The news that the German-U.K. company was planning an IPO surfaced in July. Soon, investors can buy shares in the iconic footwear brand. 

Private equity firm L Catterton acquired a majority stake in Birkenstock in 2021Catterton agreed in 2016 to combine its existing  private equity operations with LVMH (OTVMKTS:LVMUY) and Groupe Arnault’s equity and real estate operations. Investors knew it would become an investment beast. 

Bernard Arnault doesn’t do anything half-way. After all, he’s the second wealthiest person in the world for good reason. 

In the past three years, Birkenstock’s revenues have grown from 727.9 million euros ($781.2 million) in 2020 (September year-end) to 1.24 billion euros ($1.33 billion) in 2022. That represents a compound annual growth rate of 35%. Profits have nearly doubled over the same timeframe. 

Birkenstock’s got a lot more traction than people realize. 

SharkNinja (SN)

Source: Shutterstock

On July 31, SharkNinja (NYSE:SN) separated from its parent JS Global Lifestyle Company (OTCMKTS:JGLCF) into a separately traded public company.   

“Our success lies in understanding our consumers’ needs and rapidly developing innovative products to exceed their expectations,” stated SharkNinja CEO Mark Barrocas. “This approach has enabled us to build two billion-dollar brands, Shark and Ninja, by establishing leadership positions across numerous household product categories.” 

JS Global shareholders got one SharkNinja share for every 25 held in the parent. On pg. 2 of the company’s prospectus, you’ll see that it’s taking U.S. market share in many of its products. For example, in 2019, it had 4% of the U.S. market in toasters. In 2022, it was 23%. Air fryers have more than doubled over the past three years from 12% to 27%.  

As a result of these market share gains, revenues over the past five years have grown by 26% compounded annually. At the same time, its operating expenses have increased considerably, reducing its operating margins. 

Look past this. The company is reinvesting in its business and growth. Five years from now, the margins will be much sweeter, potentially doubling operating profits by 2025. 

Oddity Tech (ODD)

Source: shutterstock.com/Liu zishan

Oddity Tech (NASDAQ:ODD) is an Israeli-based tech company looking to transform their global beauty and wellness market. 

“We invest heavily in data science, machine learning, and computer vision, and we have an evergreen commitment to exploring and investing in emerging technologies,” states Oddity’s July IPO prospectus. “Our technology innovations, when combined with our world-class physical product range and compelling brands built to win online, aim to eliminate significant friction for customers and support a seamless end-to-end user experience.”

Oddity sells its two brands digitally through its online platform, delivering a top-notch customer experience. With more than 40 million site visitors, over four million active customers have purchased products online at least once in the past 12 months. 

In 2022, Oddity’s revenue was $324.5 million, nearly 3x sales two years earlier, while its operating income was $27.7 million, 66% higher than in 2020. With almost 70% gross margins, future earnings growth is inevitable. 

Based on the outstanding 54.8 million Class A and Class B shares, L Catterton owns 25.4% of Oddity’s equity and 8.6% of its voting power. Founder and CEO Oran Holtzman controls the company with 76.3% of the votes. 

Dual class share structure or not, Oddity’s a winner. 

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines  

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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