2014 has been a big year for initial public offerings. Over the last 12 months, more than 60 companies debuted on the share market with Fairfax media reporting that a total of US$14.6 billion was raised.
However, 2015 is expected to be a more difficult year for the IPO market with investors tipped to become more choosy with which stocks they decide to invest in. This can be attributed to concerns over the state of the economy, a higher level of volatility and expectations of a rate hike in the United States at some point in the New Year.
The quality of recent IPO’s could also play on investors’ minds. While stocks such as Medibank Private Ltd (ASX: MPL), Healthscope Ltd (ASX: HSO) and iSentia Group Ltd (ASX: ISD) have performed strongly since their floats, others, including Estia Health Ltd (ASX: EHE) and Simonds Group Ltd (ASX: SIO) have hurt investor confidence with their shares sitting well below their initial prices.
Given the concerns over the Australian and global economy going into 2015, investors will primarily look for companies with strong balance sheets and reliable management teams who can deliver strong growth in the long-run.
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Investors need to remember that the IPO market isn’t always the best place to find the best stocks. Some of the greatest stocks you could buy in 2015 are already trading on the ASX, and at extremely compelling prices.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.
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