#IPOs – $ZKIN and others…

Today, let’s take a look back at a couple of recent stock IPOs and a new one on a buy from yesterday.

As has been stated in a previous post here, buying into an IPOs is actually one of the easiest decisions in stock investing but never let a broker con you into doing it the day of the offering.

Instead, note the high price and the low price on the first IPO is traded. Those are the lines in the sand or the Darvas box around the first day of trading (see the charts below).  The time to buy, invest, is on a close above the high of the first day with a stop loss below the high of the first day.  That is usually a low-risk trade since the real good news comes when the stock proves it can move up from all the hype surrounding the offering itself and if it falls back the stop to exit is close by.

Applying this to the newest offering here,  ZKIN (ZK Intl Group) would have created a buy on yesterday’s close (9/5) at 9.49 above its first day high of 8.68.  Today it closed at 10.27 up 8.2%.  The stop-loss is a close below 8.68 but with an 8.2% leap in profits already in the stock one might want to at least put in a break-even to avoid any loss.

These are purely technical signals.  I have no idea what that company does except it is Chinese.

To sum up the other IPOs here that have given recent buy signals, ZEAL is up 7.1% and RNGR is down 2.6% from its buy.  RNGR at 14.53 is close to its stopping point at 14.50.

(click on the chart for a larger view)

 

A $ZEAL for investors…

Investing in an IPO is actually one of the easiest decisions in stock trading but not on its first day.

But it is an IPO’s first day of trading that gives a clear look at when to buy the stock.  Simply note the high price and the low price on day one of the IPO. Those are the lines in the sand (see chart 0f ZEAL below). The stock is a buy on a close above the high of the first day with a tight stop loss below the high of the first day.

With ZEAL that buy would have been at 18.95 on the open of August 28 (after its close above the high of the first day at on August 25).  The stop loss is on any close below 18.69, the high of the first day.  ZEAL backed off for a couple of days and retested its breakout above the IPO-day high but did not trigger its stop loss.  Today it is, at the moment, turning up again at 18.90 (UPDATED: 18.80 on the close), again with a stop below 18.69.

This is an an opportunity for investors to buy and hold.  This is not for traders.  With a good-till-cancel stop loss order in, with very little short-term risk, it is a buy it and forget it with the hope it will appreciate over time.

(click on the chart for a larger view)