Stock Quotes in this Article: HSFT, MCP, ONE

NEW YORK (Stockpickr) -- When it comes to investable ideas, you don’t need to always search for new ideas that may or may not appreciate in value. Instead, you can focus on stocks that have already proven themselves to hold appeal in the past. Often, these same stocks can fall in value as the market hits a speed bump.

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With that in mind, we’re re-visiting these strong IPO plays of a year ago, focusing on those names that delivered solid gain in their first year of trading, followed by profit-taking in their sophomore year. For those that missed these highflyers the first time around, the current selloff may represent a buying opportunity.

Here are three IPO stocks that could rebound in 2012.

From $10 to $30 back to $10. That’s roughly the move that this HiSoft Technology (HSFT) has made in its 20 months of trading. That steady drop isn’t attributable to any major breakdown in the business.

This China-based provider of outsourced IT management trailed quarterly profit forecasts by about 15% last December, which appears to have been the catalyst for a steady stream of profit-taking. A dip in profit margins in the March and June quarters also led some investors to sell. Shares also felt the pressure of rising investor dissatisfaction with most Chinese firms, as several of them turned out to have false financial statements.

Still, HiSoft looks like a solid technology play with real staying power. The company is likely to boost revenue around 40% this year, and analysts spy another 25% gain in 2012 to around $260 million. Profits are rising at a commensurate clip, and EPS could top $1 in 2012. Not bad for a $12 stock.

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For investors still concerned that this may be just another China-based company that is about to blow up, just-released third-quarter results should prove reassuring. Third-quarter sales rose 52% from a year earlier (to $59 million) and EPS of 26 cents topped the consensus by more than 10%. Steady 45% growth in business among European and U.S. customers is now being augmented by a quickly-growing business in China, where sales more than tripled from a year ago.

Analysts at UBS see shares nearly doubling to $21, while Citigroup’s analysts have a more modest $16.50 price target, implying 40% upside, though they rate the stock “at the top of our China IT Services preference ladder.”

Molycorp (MCP), a miner of rare earth minerals, actually rose another 60% from its stunning 2010 gain, but after peaking in May, shares have lost more than half its value. What went wrong? Blame it on runaway expectations. Investors simply got carried away, at one point assigning the company a $7 billion market value for a company that is still unlikely to top $1 billion in revenue before 2013 or 2014.

Investors soured on the stock after it became apparent that expectations for demand and pricing for rare earth oxides would end up lower in 2011 than some had initially assumed. After all, a number of users of these now-pricey metals, such as manufacturers of catalytic converters, began to seek ways to reduce the amount of rare earth minerals they use.

In addition, China’s decision to restrict rare earth exports -- but allow the minerals to be consumed by companies that relocate production facilities to China -- led to fears that Molycorp’s customers would simply pack up and move to China.

Indeed shares lost nearly 15% last Friday on the heels of a subpar quarterly report, pushing the stock lower than it was a year earlier. But this looks more like a company with growing pains, rather than one that is headed for real trouble.

Right now, buyers of rare earth minerals just want to see stable prices before they make long-term planning decisions. So assume that current rare earth pricing will eventually stabilize somewhere near current levels. If that happens, Molycorp should be able to deliver robust profits as a large amount of new capacity comes on line.

At current prices, rising output should enable Molycorp to double EPS in 2012 to around $3.50. Shares trade for less than 10 times that forecast. Looked at another way, the previous $7 billion valuation at the peak is now less than $3 billion. The company’s mines are likely worth at least that much if the company was ever approached by a buyer.

This is a stock for further research, as there are many moving parts that will impact the income statement. But lowered expectations can only help the company as it seeks to beat back its detractors.

Molycorp was also featured recently in "5 Earnings Stocks Poised to Pop."

Higher One (ONE) isn’t quite the dramatic-highflyer-turned-party-crasher as the first two stocks, but it still looks undervalued after a sophomore slump. Higher One provides a range of technology and cash management services to college bursars offices.

Conveniently, that technology platform can also be used by college students that want to establish a checking account, and their parents that want to deposit funds for their kids while retaining spending controls. The service is quickly gaining popularity: Two million students are now Higher One customers, up 30% from the third quarter of 2010.

The funds raised in the 2010 IPO are now being deployed to expand the services that Higher One offers to both populations it serves. The company’s OneDisburse platform is starting to work with more global financial institutions that should lead to greater usage by foreign-born students -- a fast-growing segment of the higher education population. And management is looking to make it easier for students to keep using the company’s OneAccount platform, even after they graduate from school.

After moving up into the low $20s this summer, shares have pulled back to around $18. Analysts at Barrington Research figure that the stock will resume its upward path in 2012, placing a $25 to $30 target price on the stock, figuring “the company is capable of generating consistent compound annual growth that includes increases in revenue of at least 25%, with annual growth of 30% in both adjusted net income and adjusted EBITDA.”

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At the time of publication, author had no positions in stocks mentioned.