Our Stock of the Week is Performant Financial Corporation (PFMT). This is different than our normal picks because it is a brand new IPO that just started traded this past Friday.

There are three reasons we like this situation and feel that it can move higher in the near-term.  It was priced very attractively, it has excellent underwriters and it is an intriguing story.

The IPO priced at $9 which was well below the expected range of $12-14. Unlike a Facebook deal this creates the impression of a better value and the fact that the size of the deal was decreased helps as well. Some may say this is a function of poor demand, but once the stock starts trading the valuation may help generate momentum if traders embrace the name.

The underwriters of the deal are Morgan Stanley, Goldman Sachs and Wells Fargo. Any deal with both Morgan and Goldman tends to have good support and makes institutional buyers more comfortable.

PFMT is essentially a debt collection agency but it has a specific niche working primarily for government agencies. PFMT collects delinquent student loans, overpayment of Medicare benefits and overdue taxes for the IRS. The company does not buy bad loans like many collection agencies but receives a percentage of the amount that it recovers

The company trades with a tailing PE of just 13 and is expected and is expected to grow earnings 21% this year to 93 cents and another 15% on 2013 to $1.07.

Since this has only traded one day there is no chart to study. The stock opened near the lows at $9.20 and then moved slowly higher the rest of the day before a strong finish nar the highs at $10.70.   As usual we would not chase a gap up open but would look to buy either on an early dip or on a strong close.