For those of you that don’t know me, I’m the options guy. That doesn’t mean I talk about the kind executives get. Instead, it means I like to provide readers with options to hot stocks such as Electrameccanica Vehicles (NASDAQ:SOLO) stock.
According to the company’s second-quarter results, SOLO has 63.2 million shares outstanding. It’s trading around $2.55 for a market capitalization of $164 million. That puts the newest maker of electric vehicles squarely in the microcap crowd.
In July, I wrote about the Canadian company for the first time, and while I admitted that I wouldn’t buy the company’s stock, I didn’t think it should stop others from doing so. There’s enough meat on the bone to consider taking a flyer.
InvestorPlace’s Tezcan Gecgil recently had mixed feelings about SOLO stock.
“With increased interest in alternative energy sources and vehicles, retail investors are focusing on shares of electric car makers. If you believe EVs will continue to gather drivers’ attention, then you may want to keep Electrameccanica on your radar,” Gecgil wrote on Aug. 28.
“However, the share price is likely to be choppy and could go in either direction quite fast. Therefore, I’d urge you to invest in SOLO stock only if you have risk capital to share.”
So, getting back to my role as the options guy, I think there’s got to be a few other stocks that trade around the same $170 million market cap as Electrameccanica. And there is — a total of 45 of them between $165-$175 million, according to Finviz.com.
But how many of these are worth buying?
Well, if you like small banks, there are a bunch of those, but I’ll take a pass. Instead, I’m going with two options: Lakeland Industries (NASDAQ:LAKE) and Schultze Special Purpose Acquisition Corp. (NASDAQ:SAMA).
Lakeland’s Products Sold in More Than 40 Countries
Based in Decatur, Alabama, the company manufactures protective clothing for workers in several different industries who’re handling hazardous materials as part of their daily work routines. This includes firefighters, oil and gas workers, etc.
In business for 38 years, it went public in September 1986 at $6.75 a share. At the time of its IPO, the company generated annual revenues of $13 million and $158,000 in net income. In fiscal 2020, Lakeland had sales of $107.8 million, up from $99 million in 2019.
The company’s three biggest regions for sales in 2020 were the U.S. (52%), Asia (17%), and U.K. (9%). Disposable, limited-use protective clothing and chemical protective suits accounted for more than three-quarters of its sales.
Trading at 1.3 times sales and less than 10 times its forward earnings, LAKE stock is a much better use of your fun money than SOLO stock. Over the past five years through Sept. 1, it’s got an annualized total return of 18.5%.
SPACs Are Hotter Than Hot
With a current market cap of $171 million, Schultze Special Purpose Acquisition Corp. sold 13 million shares of SAMA stock at $10 in December 2018. It had 18 months to find a business combination. On July 27, it announced that it would combine with Clever Leaves International in a combination valued at $255 million.
Clever Leaves is a medicinal-focused cannabis producer in Latin America. It has one of the largest cultivation and extraction operations in Latin America, producing dry cannabis flower at a fraction of what it costs Canadian producers.
Once the deal closes, it will have $111 million in cash, just $37 million in debt, and it will be one of the few cannabis companies listed on Nasdaq composite.
About half the company’s production is slated for Europe, another 32% in Latin America, 14% in Australia and New Zealand, and 5% to the rest of the world.
By 2022, it estimates it will generate $140 million in sales and $47 million in earnings before interest, taxes, depreciation and amortization (EBITDA). Long-term, it’s shooting for $500 million in sales and $200 million EBITDA.
The founding shareholders of SAMA will own 4.9% of the combination, other SAMA shareholders will own 39.2%, and Clever Leaves shareholders will own 55.9% and a majority.
It’s got an opportunity to stand out in a crowded marketplace.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
