I would think it goes without saying that a young IPO would be most unlikely to initially display the criteria that would come anywhere close to that displayed by a company with Durable Competitive Advantage. And one could not, generally, expect it at that stage of its business life.
As you intimated, who would know, from its early day's metrics, that Facebook would rise to the value we see today. But there again, how many dozens, if not hundreds, of early IPO's were considered 'rising stars' in the 90's and early 2000's, only to eventually fade away.
The strategy of seeking out companies that simultaneously meet or beat a set of relevant financial metrics is not generally for IPO's, or, as you suggest "young companies", but rather for established companies with good histories of positive business performance.
Trying to pick out an IPO that is likely to be a Facebook or a Microsoft is possibly a task more associated with speculation than with fundamental analysis.
Needless to say, how one spends one's money in the stock market will always be a personal choice.
I put forward my own preference which is based, in principle, on how Buffett apparently does it, and I'd say he's a 'fairly good' example of a successful investor .
But that's not to say that others cannot, or have not, done very well for themselves doing it differently. As they say, "there's many ways to kill a cat". |
