After a strong week – where the Dow rose every day the U.S. markets are
falling into another funk on Monday. The main culprit is the debt crisis in
Europe: It now looks like Greece will default, which may destabilize other weak
economies like Italy and Spain. Is it any wonder that the IPO market is having
problems? The last offering was over a month ago, and there are literally no
deals on the current calendar. Perhaps the most troubling issue, however, is the
overall performance of IPOs this year the average deal has returned a miserable
-7.2%. This is the worst run since the dot-com implosion. Then again, we've
seen a variety of duds. Some include companies like Pandora (NYSE: P ) and
Demand Media (NYSE: DMD ). At the same time, there are major concerns about
upcoming IPOs like Groupon, which is losing huge amounts of money and must deal
with many rivals. Kind of bleak, huh? This is really a matter of the intense
market gyrations it's to be expected. And of course, there are still winners.
Look at LinkedIn (NYSE: LNKD ), which is the dominant player in the professional
social networking market. The company continues to grow at a torrid pace and was
even able to post a profit in its latest quarter. Or consider HomeAway (Nasdaq:
AWAY ), which operates a marketplace for vacation rentals. In the second
quarter, the company posted a 41% increase in sales and a net profit of $2.2
million. If anything, HomeAway seems to be recession-resistant, as property
owners want to find ways to boost revenue, and vacationers want more affordable
options. The good news is that we should still see some worthy deals in the
future. For example, it looks like Zynga will still have its IPO this year. That
company is at the leading edge of online gaming and should generate about $1
billion in revenue. There are also non-tech operators that look enticing, such
as Restoration Hardware. Over the past few years, the company has transformed
itself into a high-end retailer of furnishings. As a result, comparable-sales
growth is at about 17%. It's easy to get pessimistic, but there should be some
good opportunities for investors. It will probably require some patience as well
as the stomach to deal with the inevitable volatility. Tom Taulli is the author
of " All About Short Selling " and " All About Commodities ." You can
also find him at Twitter account @ttaulli. He does not own a position in any of
the stocks named here.
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