The Medibank Private Ltd (ASX: MPL) IPO is set to be a cracker, with financial commentators expecting a quick 15% gain on November 25.
But who really knows, it could be a big flop.
Because I'm sure there's plenty of other Medibank investors – like myself– who'll be hoping to get out early.
Some will be hoping for a 'stag' profit. That is, when a stock price jumps dramatically within hours of opening.
But for me, it's a little different.
You see, when I first penned this article about the Medibank IPO, I said it ticked many of the boxes I look for in an investment. Including a fair share price.
I told readers I'd be registering to buy the stock. However I drastically underestimated how much hype the IPO would generate.
I thought if I could buy the stock for below $2.00 per share, say $1.80 or so, I'd be a happy camper. In hindsight, I should have waited and got a second pair of eyes to run over my thesis before passing judgement.
Alas, being caught up in the heat of moment, I also managed to double dip on the offer. One for the retail offer and another for the broker offer.
Now, I'm stuck with my Medibank shares. And rightly so. I'll have to hold the shares at least until The Motley Fool's strict trading rules allow me to rectify my mistake.
However, if the shares don't trend upward for weeks after the IPO, it's unlikely I'll be willing to sell them at a loss.
Instead, I'll use the holding to remind myself of the mistake I made.
2 stocks better than Medibank Private
So if you missed the Medibank IPO, I say to you, don't worry.
Indeed, there's plenty of other, cheaper, insurance stocks on the ASX worthy of your consideration anyway. Arguably they hold better growth prospects too.
For example, embattled general insurer QBE Insurance Group Ltd (ASX: QBE) trades on a price-book ratio of just 1.16, dividend yield of 3.4% and a price-earnings ratio of 15. By comparison Medibank will trade on 21 times earnings per share (for retail investors at $2.00) and a dividend yield of 3.5%.
Even the smaller, and more profitable, health insurer NIB Holdings Limited (ASX: NHF) isn't that pricey. It has a 3.4% fully franked dividend yield and P/E ratio of 19.9. I already own shares in it and will keep holding indefinitely.
