What are IPO Stocks?

An Initial Public Offering (IPO) happens when a private company offers its shares to the public for the first time. This marks the shift from being privately owned to becoming a publicly traded business.

IPO stocks can offer big growth potential, especially if you get in early. And with the right IPO screeners, you can spot new opportunities before they take off.

Going public helps companies raise money from investors. They can use this capital to grow their business, pay off debt, or fund new projects. At the same time, it gives everyday investors the chance to own a piece of the company.

Many investors are drawn to IPOs because they can buy in at the beginning of the company’s life as a public company. Investors trading IPO stocks capitalize on the rapid growth of new, developing companies.

Why trade IPOs

Traders love IPO stocks because of their potential for big price jumps, especially when a company is well-known or part of a hot industry. Everyone wants to get in early on the next big thing.

A highly anticipated IPO usually comes with a lot of media coverage and hype. That buzz can attract even more traders, pushing prices up fast right after shares hit the market.

This momentum can fuel a surge in trading volume, especially in the early days. For traders who time it right, the payoff can be huge.

Although many traders think of the initial surge in price immediately after the stock goes public, IPO stocks will form larger bases over time.

IPO Lifecycle Phases

Eve Boboch, Kurt Dail, Kathey Donnely, and Eric Krull, authors of The Lifecycle Trade: How to Win at Trading IPOs and Super Growth Stocks, studied hundreds of IPO stocks over many decades. The common themes they discovered all fit within a very simple stock lifecycle.

IPO Advance Phase (IPO-AP)

Generally short-lived, this initial advance of a new issue may create an initial rally soon after the stock IPOs. Some new issues move up immediately after day one, while others may take a couple of weeks.

This first rally generally lasts under twenty weeks and can see gains of over 100%. Be cautious here as the stock can quickly drop faster than it went up.

Institutional Due Diligence Phase (I-DDP)

Knowing a stock has already advanced through an IPO-AP is still worth keeping an eye on, even though it may begin to trend downward and potentially create a new all-time low. The I-DDP represents a consolidation period where large institutions begin accumulating shares as the new stock begins to prove its growth potential.

As the stock matures, a more traditional basing pattern can emerge as the price regains strength and heads towards previous all-time highs. This Turbulence Zone acts as a traditional pivot point with the strongest stocks breaking out into new highs.

Institutional Advanced Phase (I-AP)

This is where a stock breaks out beyond the turbulence zone and can be held for a longer-term move. This is the phase that can generate the highest profits after the new IPO stock proves its growth potential.

Understanding where the stock is in its Lifecycle will help build conviction in understanding the strength of the move. Look for stocks breaking out into new highs during the I-AP to maximize profits.

Although CAVA had a short-lived IPO-AP, the I-DDP formed an early High-Volume entry. When the price broke out into new highs, it continued to advance 200% before reaching a climax top.

The Best IPO Screeners

To screen for IPOs, simply add an IPO Date filter to your favorite screeners to isolate the newest issued stocks.

• Add an IPO Date filter to spot the newest listings.
• Filter by volume—look for stocks trading at least $20M in daily dollar volume.
• Focus on performance—prioritize IPOs that’ve gained 100% in under 90 days.
• Look at the 52-week range—the best IPOs are often trading within 30% of their highs.
• Wait for base patterns before entering, and always manage your risk.

Kathy Donnelly: Focus on Liquid IPOs

Kathy emphasizes that institutional demand drives big moves, and institutions can’t buy into illiquid stocks. That’s why liquidity is non-negotiable.

Set your screener to only show stocks trading over $100M in daily dollar volume. This ensures they’re viable targets for big buyers, and increases your odds of catching a major move.

Eve Boboch: The Next Apple

Eve recommends layering in fundamental filters to find IPOs with strong growth potential. Since IPOs are young, focus on the most recent quarter’s growth numbers.

Look for stocks with at least 35% quarter-over-quarter growth in both earnings and sales. These companies are more likely to attract institutional attention.

Eric Krull: IPOs Above their 21-day EMA

Eric suggests a simple but powerful technical filter: stocks trading above their 21-day exponential moving average. This shows you which IPOs are in short-term uptrends, even if they don’t have much history yet.

This filter helps you stay aligned with the market’s direction and avoid IPOs that are stuck in downtrends.

More Considerations to Find the Next Leading IPO

Kurt Dail urges the use of multiple IPO Screeners at different stages in every market cycle. Include an IPO date when you are screening.

Fundamental criteria:

• Rising institutional sponsorship signals smart money interest.
• Accelerating profit margins shows improving efficiency and financial strength.
• Upward revisions in EPS and sales estimates hints at future growth.

Technical indicators:

• Relative Strength Rating above 85 identifies IPOs outperforming most of the market.
• The highest volume since IPO may signal a breakout or accumulation phase.
• The closer to 52-week highs, the better the strength.

By layering these filters into your screener, you’ll hone in on the IPOs with the qualities institutions are watching for with the highest potential for big gains.

Using IPO Screener Presets in Deepvue

To make finding stocks easy, Deepvue partnered with the Lifecycle Trade team and other top traders to bring you their daily screens.

In the Screener module, navigate to the Screener Preset tab and type IPO. You will see all the available screens the Lifecycle Trade team uses to find top-performing IPOs.

Favorite any screen to pin it to the top of your Watchlist module by clicking the Star. Click the three dots to duplicate any screen into your Saved Screens to make it your own.

Key Takeaways for IPO Screeners

An IPO is when a private company sells shares to the public for the first time. IPOs help companies raise capital for growth while giving investors early access to potential future leaders.

IPO stocks can offer explosive growth, especially in their early public years. Some of the biggest moves in a stock’s life often happen within the first 10 years after going public.

IPOs follow a lifecycle pattern:

1. IPO Advance Phase (IPO-AP)

• The first sharp rally post-IPO
• Quick gains of over 100% are possible

2. Institutional Due Diligence Phase (I-DDP)

• The stock cools off and may hit new lows.
• Institutions begin quietly accumulating shares during consolidation.

3. Institutional Advance Phase (I-AP)

• The stock breaks out from its base and enters a long-term uptrend.
• Highest potential profits usually occur in this phase.

Use IPO screeners with filters like IPO date, $20M+ daily volume, 100%+ gain in 90 days, under 30% off 52-week highs, and solid base patterns.

Experts recommend focusing on high liquidity, strong earnings and sales growth, stocks above their 21-day EMA, rising institutional support, improving fundamentals, and technical strength like high relative volume and RS ratings.

By combining these filters, you can pinpoint the IPO stocks with the strongest growth potential and institutional backing.