The electric-vehicle boom has its foot firmly on the gas. While some of the top EV stocks look at bit toppy {Tesla (NASDAQ:TSLA) and Nio Inc. (NYSE:NIO), for example}, they can still climb a great deal further. That’s especially true for Workhorse Group (NASDAQ:WKHS) stock.
The last time I weighed in on WKHS stock, I said, “I believe.. {the} stock could double with a good deal of patience for a few reasons, including the EV boom, solid contracts, and an $18 billion last-mile delivery opportunity.”
That was on Aug. 26, as WKHS stock traded at a low of $17.03. Shortly afterwards, Workhorse jumped to a high of $30.99 before pulling back with the broader market. However, with patience, I strongly believe the stock could double from its current levels.
After all, it has very solid catalysts that should give the shares plenty of horsepower.
The EV Boom Shows No Signs of Slowing
Global demand for EVs is only expected to grow.
According to the International Energy Agency, we could see about 130 million EVs on the road by 2030, a monumental move from 5.1 million in 2018.
And, according to The New York Times contributor Jack Ewing, traditional car companies are playing catch up to big-named EV companies like Tesla. “The traditional carmakers’ best hope to avoid oblivion will be to exploit their expertise in supply chains and mass production to churn out economical electrical cars by the millions,” he wrote.
“The traditional car industry is still behind,” added Peter Carlsson, who ran Tesla’s supplier network. “But there is a massive amount of resources going into the race to beat Tesla. A number, not all, of the big carmakers are going to catch up.”
In short, the EV market is poised to increase significantly and could be a very big part of the future of autos.
Workhorse Has Already Obtained Solid Contracts
Just weeks ago, the company announced a contract with Ryder (NYSE:R), which will begin offering Workhorse’s C-Series Workhorse all-electric step vans to its customers.
There’s also speculation that Workhorse could win a $6 billion United States Postal Service (USPS) next-generation delivery truck contract. That deal would do incredible things for a stock with a market cap of just $2.55 billion at the moment.
USPS is looking to replace an aging fleet of trucks.
“The post office now uses about 140,000 Grumman Long Life Vehicles for its main delivery service. Manufactured from 1987 through 1994, they need to be replaced. A 2014 audit from the office of the USPS inspector general found that the current fleet was expected to only meet the delivery needs of the agency through the 2017 fiscal year,” says Trucks.com contributor Jerry Hirsch.
The Bottom Line on WKHS Stock
There are plenty of catalysts that have the potential to tremendously boost the shares. It already inked a deal with Ryder, and there’s hope that it can win the contract with USPS.
In addition, Cowen analyst Jeffrey Osborne is impressed by WKHS stock. “The [second half production] ramp remains on track and management continues to target [making] 300 [to] 400 vehicles by the end of the year. After a tough few quarters, we see greener pastures ahead.”
While the shares won’t explode overnight, I strongly believe that they could double. I said the same thing as the stock traded at $17.03 before it ran to nearly $31 a share.
Buy it, then forget about it. Check on it in about a year. The investment should pay off nicely.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
