Burlington Stores Quiet Period Expiration Provides Buying Opportunity

| About: Burlington Stores, (BURL)

Burlington Stores (NYSE:BURL) made a splash on the IPO market recently with its sale of 13.3 million shares of common stock. A discount retailer with competition such as T.J. Maxx (NYSE:TJX), Ross (NASDAQ:ROST) and others, Burlington has been one of leaders in the industry for a number of years. The IPO drew considerable interest from investors who foresaw an opportunity for gains in a niche that is expected to continue to see steady growth under current economic conditions.

Burlington Stores specializes in clothing, accessories, home décor, linens and gifts along with their signature coats at discounts up to 70 percent off retail prices. The company began as an offshoot of the Burlington textile factories, and quickly became one of the most popular retail outlets for women's clothing in home goods in the country. Bain Capital acquired the company along with Guitar Center, Michaels Stores, and Toy "R" Us, Inc. during a period between 2004 and 2007. Bain maintains its hold of 54.4 million shares during the IPO.

The IPO was introduced on October 2, 2013 at $17 per share and got a warm welcome from investors. The stock rose 40 percent by 10 a.m. going to $23.57 and raising $226.7 million for the company. Morgan Stanley, Bank of America Corporation and J. P. Morgan Chase & Co. all played a part in managing the IPO.

Like other IPO stocks, Burlington has to conform to the SEC's regulations for a quiet period. Investors can generally expect new IPOs to rise as this quiet period ends because the company's underwriters will usually lean toward writing positive reports on the prospects of the company they just took public.

Though Burlington, like other retailers, has suffered losses over the recession, it's discount pricing makes the company better positioned to be on the cutting edge of the recovery, with steady improvement year-over-year that has already been reported.

The high visibility of the underwriters provides credibility for the company, and investors could now be in a position to take advantage of the expected rise at the end of the quiet period to make more gains on BURL's stock price.

Disclosure: I am long BURL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.