Avoid These 2 Stocks When They IPO

"Better-burger" chains Fatburger and Bobby's Burger Palace are planning to go public soon, and both intend to use the little-known Regulation A+ method to do it. While it is a novel path to take, and could give small investors a chance to get in early on stocks in a way that is usually reserved for big-money players, you would do well to steer clear.

The Regulation A+ IPO process was created as a result of the 2012 Jumpstart Our Business Startups (JOBS) Act, which eased federal regulations and allowed small businesses and start-ups to raise money from individuals. If you've wondered why crowdfunding campaigns from Kickstarter, Indiegogo, and other platforms seem more prevalent today, well, there you go: The JOBS Act means businesses can gain access to a wider swath of investors' money without having to go public.

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Source: Fool.com