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Stock Strategist

A Look at Several Recent IPOs

Several interesting firms have gone public recently, but valuation is an issue.

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Last quarter, we offered some thoughts on the initial public offering market and looked at three recently public stocks that we thought looked attractive:  Energy Transfer Equity (ETE),  SAIC (SAI), and  Stanley (SXE). Since then, our opinion on each of these firms has not changed, but the share prices have.

Though IPO activity in the energy sector has cooled somewhat over the past three months, the share prices of many pipeline operators have risen steadily. Energy Transfer Equity is no exception; the stock is up about 19% since we highlighted it, and we no longer believe it is a bargain. The business, however, continues to perform well. Also, we think the financial performance of the recently acquired Transwestern pipeline demonstrates that management paid a great price for this asset, especially given the growth opportunities it faces.

Michael Hodel does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.