There are always plenty of other good stocks around to choose from
whose value may appreciate just as much as IPO stocks.
The Internet and e-commerce sector have been credited as a catalyst
for the explosion of the IPOs in recent years, as it offers new paradigm
of conducting business in comparison to traditional methods.Netscape
(NSCP), now part of America Online (AOL) which also recently
merged with Time Warner, was perhaps the first IPO in this sector.
Others such as Amazon.com (AMZN), Yahoo (YHOO), Ebay (EBAY),
and E*Trade (ET) were successful IPO samples in the Internet sector.
Mergers And Acquisitions (M&A)
You might have heard of the term "sector consolidation."
Consolidation refers to the process by which a sector rife with many
competing companies goes through a transformation at the end of
which it is left with a only a few companies. Consolidation is a natural
course for many sectors, as there usually is not enough business to
support all the companies in those sectors. Some simply go out of
business, others may get absorbed into other companies (acquisition),
and some may pool their resources together to form new and larger
As a company becomes a target of an acquisition or takeover
(especially by another well known entity), its stock begins to receive
more attention from the investors usually jumping at such
announcement. A takeover or acquisition intention is an automatic
vote of confidence in the company, making its stock more appealing to
the investors. The process of a takeover is a complex one, beyond the
scope of this book, but here is a very simple description. Many times a
smaller company could become a takeover target by a larger company
because it has something that the larger company views as a good …