3 Hot IPOs to Put on Your Watch List

Since the financial crisis, the IPO market has been a yawn.  But as the
equities markets improved over the last six months, investors have been
warming-up to public offerings. In some cases, the returns have been stunning. 
Just last week, the car-sharing service, Zipcar (NYSE: ZIP ), saw its shares
spiked 56% on its first-day of trading.  Some other hot ones include Qihoo 360
Technology (NASDAQ: QIHU ), Dangdang (NASDAQ: DANG ) Youku (NASDAQ: YOKU ). 
All have posted 100%+ returns. So how can individual investors get these types
of gains?  Unfortunately, it's nearly impossible.  For the most part, Wall
Street banks allocate IPOs to hedge funds, institutions and wealthy investors. 
It's a way to make their top clients happy. Despite this, there are still
opportunities for individual investors.  Keep in mind that – if a company is
a game-changer – there should be ample long-term gains.  After all, this was
the case with companies like Google (NASDAQ: GOOG ), Salesforce.com (NYSE: CRM )
and Chipotle Mexican Grill (NYSE: CMG ). And lately, there have certainly been
some standout offerings.  Let's take a look: ServiceSource IPO Founded in the
late 1990s, ServiceSource (NASDAQ: SREV ) has been able to build a solid
business.  ServiceSource helps companies manage their revenue streams, such as
from renewals, maintenance and subscription agreements. The fact is that this
can be a difficult process.  But to make things easier, ServiceSource has
developed a suite of cloud-based technologies to automate things.  Yet the
company also realizes that it needs to provide high-end services. The
ServiceSource platform is a global offering, which is translated into over 30
languages.  It also is available for a variety of industries like technology,
life sciences and healthcare. From 2008 to 2010, revenue increased from $100.3
million to $152.9 million.  Thus, ServiceSource trades at about 5 times
revenue.  While this may seem pricey, it is actually much cheaper than other
cloud operators.  Consider that Salesforce.com is trading 10 times revenue and
SuccessFactors (NASDAQ: SFSF ) is selling at a 14 multiple. GNC Holdings IPO Of
course, GNC Holdings (NYSE: GNC ) is a leading specialty retailer for health and
wellness products.  On a global basis, it is a dominant player, with over 7,200
locations.  Actually, the company is 12 times larger than its next largest
rival. The large scale means that GNC has much leverage in getting lower
costs.  But the company has also invested heavily in creating premium product
offerings, which get strong margins.  These include Mega Men, Longevity
Factors, Pro Performance and Ultra Mega.  GNC-branded products accounted for
$850 million in revenue last year. No doubt, GNC realizes that the Internet is a
lucrative channel.  To this end, the company revamped its website in 2009.  So
far, it has been gaining traction, in terms of traffic and conversion rates.
Total revenues for GNC have been growing at a steady rate, going from $1.67
billion in 2008 to $1.82 billion in 2010.  The EBITDA is a hefty $259.4
million. The company is selling at 17 times earnings (for the past 12 months). 
This is certainly a reasonable valuation in light of the company's premium
brand, global footprint and long-term growth potential. Renren IPO The company
recently filed for an IPO and the shares should start trading within a couple
weeks.  The proposed ticker is RENN and the price range was set at $9 to $11
per share. Renren is the leading social networking site in China.  There are
roughly 117 million activated users and the growth rate is about 2 million users
per month. Like Facebook, Renren allows its users to connect with friends, play
games, listen to music and even shop.  Interestingly enough, the company
recently launched jingwei.com.  It's a professional network, which is similar
to LinkedIn. Of course, Renren's growth has been sizzling.  Net revenues
spiked from $13.8 million in 2008 to $76.5 million in 2010.  That's a
compound annual growth rate of 135.7%. True, Renren is losing money.  The net
loss was $61.2 million last year.  Then again, the company is focused on
growing its operations – not generating cash flows. It's a good bet that
Renren will have a strong opening when it hits the US markets.  Because of
this, investors should wait a week or so to get a sense of the direction of the
stock before making a trade.  Expect lots of volatility. As of this writing,
Hilary Kramer did not own a position in any of the stocks named here.