2021 TSX IPO Recap: 3 Outperformers and 1 Dud

Three companies that went public in 2021 continue to outperform, but a promising IPO didn’t live up to investors’ expectations.

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The TSX wasn’t lacking in initial public offerings (IPOs) in 2021. As of October 31, 2021, about 208 companies went public this year. March had the highest number (31), while only a dozen firms debuted in September. The average monthly listing was nearly 21.

Some names had successful debuts, while others didn’t generate as much interest. Among the prominent stocks that continue to deliver gains are Nexus (TSX:NXR.UN), Telus International (TSX:TIXT)(NYSE:TIXT), and Payfare (TSX:PAY). The big letdown is Tilray (TSX:TLRY)(NASDAQ:TLRY) in the cannabis sector.

Industrial-focused REIT

No one expected TSXV graduate Nexus to outperform when it climbed the big stage in late January. The real estate investment trust’s (REIT) CEO Kelly Hanczyk said, “The graduation to the TSX is part of our strategy to increase exposure to investors and improve our trading liquidity.”

As of November 29, 2021, the real estate stock traded at $12.23, or 54.2% higher than on its first trading day. Income investors also delight in the mouth-watering 5.23% dividend. This $706.86 million REIT is growth oriented and owns a quality portfolio of office, retail, and industrial properties. However, the primary focus is on multi-use, high-demand industrial properties.

Next-gen digital technologies

Telus International, backed by Canada’s second-largest telecommunications company, is the largest tech IPO in the TSX’s history. Its valuation even surpassed TELUS’s from 2000. The market capitalization today is $11.65 billion compared to $8.5 billion on February 5, 2021.

Darren Entwistle, president and CEO of TELUS, said, “TELUS International has been a pillar within TELUS’s dynamic growth strategy.” The company designs, builds, and delivers next-generation digital solutions. Its goal is to support the digital transformation of clients. It should enable them to embrace and adapt to these technologies more quickly.

The share price of $45.16 is 13% higher than on IPO day but could rise further in the coming quarters. After reporting a 30% year-over-year growth (Q3 2021 versus Q3 2020), management expects to see double-digit growth by year-end 2021.

Growing gig economy

Payfare opened at $6 per share on March 19, 2021, then soared to as high as $13.43 on July 14, 2021. While it’s lost steam since then, investors are still up 49.3% ($8.96) from the IPO date. Market analysts are bullish and recommend a buy rating. They forecast a return potential of between 70.2% and 89.7% in 12 months.

This growth stock is attractive to millennials, given the price and business nature. The $411.18 million financial technology company operates in the gig economy. It provides payout solutions to gig platforms like Uber, Lyft, and DoorDash. Gig workers gain instant access to earnings if they are working for Payfare’s partners.

Mounting losses

Tilray was the first pure-play marijuana company listed on the NASDAQ in 2018. The timing was perfect as due to the highly anticipated marijuana boom. Unfortunately, most cannabis producers piled up losses instead of profits. It was a promising debut on the TSX in May 2021, with the price soaring to 34.35% to $26 in one month.

Although total revenue in fiscal 2021 (year ended May 31, 2021) increased 26.6% year over year, Tilray’s net loss ballooned 233.2% to US$336 million. Thus, it’s not surprising the stock is down 32.5% year to date ($13.06 per share).

Growth potentials and none

Nexus, Telus International, and Payfare are well positioned to deliver more gains in the near term. Meanwhile, Tilray won’t be on investors’ radars anytime soon. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends TELUS CORPORATION and TELUS International (Cda) Inc.

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