Attracted by promising growth, savvy investors have scooped up shares of On Holding and Sovos Brands. Rounding out a top-tier trio of IPO stocks to watch, Life Time Group — a purveyor of athletic clubs and a full-scale wellness ecosystem — continues to test a fresh buy zone as it serves up some attention-grabbing numbers.
All three of these top-rated 2021 IPOs earn a spot on both the IBD Breakout Stocks Index and the IPO Leaders screen. LTH and ONON stock also made this month's list of new buys by the best mutual funds.
Further cementing their credentials as leading IPO stocks to watch, each has been featured in multiple IBD columns. Life Time, Sovos Brands and ONON stock have all been profiled as IPO Stocks Of The Week.
Life Time reported solid Q1 results on April 25. Sovos Brands releases earnings after the close as On Holding laces up for its report on May 16.
Sovos Brands, a maker of packaged foods with a portfolio that includes the incredibly popular Rao's pasta sauce, has cooked up average annual earnings growth of 64% over the last three years.
Swiss footwear and apparel firm On, which collaborates with recently retired tennis star Roger Federer, continues to sprint toward increasing profitability. Sales growth accelerated 89% to $396.7 million in Q4. Analysts estimate 107% earnings growth in Q1, leading to a 131% gain for the full year.
See Who Joins These Top IPO Stocks On The IBD Breakout Stocks Index
IPO Stocks With Healthy And Tasty Growth
Impressive ratings in IBD Stock Checkup and MarketSmith reveal the market-leading strength of these three IPOs.
ONON stock leads with the highest-possible 99 Composite Rating. But Life Time is not far behind with a 96, meaning it's outpacing 96% of all stocks across all industries in terms of key stock-picking factors.
Each of these IPO stocks sports an A+ or A Accumulation/Distribution Rating, which tracks big-lot buying by institutional investors over the last 13 weeks. This metric shows large money managers have invested heavily in Life Time and these other IPOs during that period.
| Company | Ticker | Comp Rtg | EPS chg last qtr | EPS est cur qtr | EPS est cur yr | Sales chg last qtr | EPS Rtg | RS Rtg | SMR Rtg | A/D Rtg |
|---|---|---|---|---|---|---|---|---|---|---|
| On | ONON | 99 | 150%* | 107% | 131% | 89% | 79 | 98 | A | A+ |
| Sovos | SOVO | 97 | 46 | 4 | 0 | 39 | 77 | 94 | B | A |
| Life Time | LTH | 97 | 170* | 1,000 | 214 | 30 | 79 | 96 | C | A+ |
*Based on comparison to prior-year quarter that showed a loss |
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Life Time Accelerates Pickleball And Profits
Founded in 1992, Life Time empowers people to live healthy, happy lives through a portfolio of more than 160 athletic country clubs across the U.S. and Canada. Its athletic clubs feature pools, gyms, and courts for tennis and the increasingly popular pickleball. It also offers spas, cafes, athletic events and more. In short, the Life Time ecosystem addresses all aspects of healthy living, healthy aging and life-supporting entertainment for people of all ages, from kids to seniors.
On April 25, the company reported Q1 earnings that beat analyst estimates by 144% and raising its full-year EPS guidance by $30 million to $470 million-$490 million. Albeit based on the prior-year quarter that showed a loss, Wall Street forecasts a whopping 1,000% earnings spike in Q2 and a 214% gain for the year. Analysts expect a 52% EPS gain in 2024.
Life Time Warms Up With Fellow IPO Stocks
On its Q1 earnings beat, Life Time jumped past a 20.45 buy point in a cup-shape base in good volume, but quickly retreated below it. LTH stock is now limbering up to take another crack at that entry. The stock is now just 2% below the buy point.
Since the earlier breakout, the relative strength line has eased back but remains within striking distance of a new 52-week high. Note that the stock remains above both its 21-day exponential moving average and its 50-day line.
SOVO stock is also extended, closing 8% beyond the buy point ahead of today's earnings report. Sovos Brands is edging higher heading into the close.
ONON stock has climbed out of buy range from its March breakout as it faces an earnings test later this month.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
