Zoe’s Kitchen, Inc. (ZOES) went public on Friday, earning those privileged enough to score shares at the $15 IPO price a lightning-quick fortune.
The stock opened trading at $24.67, representing a 64.47% pop over the IPO price.
Brentwood Associates, the private equity firm behind Zoe’s Kitchen, was the big winner. The firm holds eight million shares at the pre-offering price.
Jefferies, Piper Jaffray and RW Baird acted as the IPO’s book runners. Rest assured, those firms’ best clients were offered an opportunity to secure shares at the pre-offering price of $15.
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In the meantime, tech insider, Tom Anderson, just unearthed a company with some serious tailwinds behind it. I wouldn’t be a bit surprised if it’s atop the Nasdaq “biggest gainers” list within the next couple of days.
~ Robert Williams, Founder, Wall Street Daily
From the desk of Tom Anderson…
I think you’ll agree that spotting companies with the potential to generate double- or triple-digit gains isn’t easy.
But there are four super simple indicators I like to use that narrow the field by a significant margin.
I’d like to reveal these killer growth metrics today – along with one company that’s really picking up steam in all four areas.
In fact, some Wall Street Daily readers might recognize it from previous articles…
Killer Growth Metric #1: Customer Base With Deep Pockets. This one is pretty self-explanatory. After all, for a company to capitalize on a good idea, it needs customers who are willing to pay for it.
Killer Growth Metric #2: Wide Moat to Keep Competitors Away. It’s important to have a strong, competitive advantage. Other firms will try to copy a good, emerging technology and capitalize on it themselves – but they just won’t be able to measure up.
Killer Growth Metric #3: A Small Revenue Base. It might seem strange to look for a company that doesn’t pull in a ton of revenue. But it’s all about growth. If a company is already ringing up $10 billion in sales, it’ll be difficult for it to grow quickly compared to a company with, say, $50 million in sales.
Killer Growth Metric #4: Big Enough Portion of the Pie to Be Worthwhile. If a company has one billion shares outstanding, like Yahoo! (YHOO), then there are too many mouths to feed. Even an extra $50 million in profits would be too diluted to move the stock price. So I look for a company with just enough shares to be worthwhile.
There you have it. The list might be short and sweet, but taken together, these four metrics provide an insanely powerful filter for discovering the biggest gainers in the market.
Now it’s time to put it to the test…
A “Flash” of Genius
This week, my four metrics just spotted a company that shows all the signs of explosive growth potential: Fusion-io (FIO).
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If you’re unfamiliar with the technology, Fusion-io provides resources to datacenters, allowing them to optimize their hardware.
Essentially, the company inserts flash memory into a datacenter’s servers at any point where there could be a bottleneck, significantly enhancing the speed of their operations.
On a real-world level, this allows web companies to move content across the internet as quickly as possible.
But that’s hardly the extent of Fusion-io’s reach.
This year, Facebook and Apple are rapidly expanding their datacenters to offer streaming music, video and messaging. They don’t want to be left behind by big, multi-product companies like Google (GOOG) or smaller, specialized companies like Pandora (P).
Well, with its dominant position in the industry, Fusion-io stands to benefit alongside Facebook and Apple as they expand their operations.
That makes right now the perfect opportunity to cash in on the next wave of digital entertainment expansion.
Plus, Fusion-io is still small, with just $375 million in revenue in the past year. (Metric #3, check!)
It has 100 million shares outstanding, so a quick increase in profit from the data center expansion will produce high growth. (Metric #4, check!)
And you can’t find customers with deeper pockets than Facebook and Apple. (Metric #1, check!)
To top it off, Fusion-io’s secret sauce is that it uses embedded controllers to create a virtual storage layer that’s faster than writing to disk, even solid state disks. This isn’t easy to do, so other vendors who compete with Fusion-io – like EMC Corporation (EMC) and Seagate Technology (STX) – have chosen to simply focus on selling solid state drives rather than integrating flash. (Metric #2, check!)
Bottom line: When you combine the right product, with the right customers, at the right time – and pair them with a company whose model can handle dramatic profit growth – then you could have one of the best performers of 2014.