Monday, February 26, 2024
HomestocksPut these IPOs on your radar: Pro

Put these IPOs on your radar: Pro

Chinese e-commerce giant Alibaba Group and King Digital Entertainment, maker of hit mobile phone game "Candy Crush Saga," are the top initial public offerings to watch in the days and weeks to come, Eric Jackson, founder of Ironfire Capital, said Monday on CNBC.

"Alibaba would be tops on my list … I think it's a very special company. It's got some unique characteristics going for it with its huge growth in China," Jackson told "Squawk on the Street," adding King Digital is a "solid company."

Alibaba is expected to hold its IPO within the next few weeks. King Digital is one of 10 companies thought to go public this week, along with 2U, Aerohive Networks, Applied Genetic Technologies, Bluerock Residential Growth, CBS Outdoor Americas, Everyday Health, Nord Anglia Education, Square 1 Financial and TriNet Group.

(Read more: IPOs swamp market, swim against 'bubble' tide)

But Investors might be smart to sit these IPOs out, Jackson said.

"In general, I think, IPOs, and we've seen this over the last few years, really have not been uniformly strong performers out of the gate," he said. "I think most investors have been better served sitting back and waiting six months post-IPO before they really get into the stock when valuations tend to settle down."

To make his point, Jackson pointed to Pandora and Yelp as examples. Both stocks languished and were nearly forgotten after their IPOs, only to finally rebound when the companies reported several quarters of strong earnings results. Anyone who bought these stocks at their bottom, though, has enjoyed a healthy return, he said.

(Read more: This IPO trend really worries me: Cramer)

Jackson sees a similar opportunity in Chegg, a textbook-rental business that went public in November. Chegg's IPO of 15 million shares priced at $12.50 each, higher than the expected range of $9.50 to $11.50. The stock has only struggled since its IPO, though. It currently trades at around $7 a share, which Jackson noted is nearly half off the IPO price.

—By CNBC's Drew Sandholm. Follow him on Twitter @DrewSandholm.

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