Among the most interesting electric vehicle (EV) companies out there is Boston-based XL Fleet (NYSE:XL). This company recently completed its reverse merger with shell company Pivotal Investment, which used to trade under the ticker PIC. Now that XL Fleet is trading on the New York Stock Exchange, it’s a great time to take a closer look at XL stock.
If you’re new to this company, then you might think that XL Fleet actually sells fleets of electric vehicles. On the contrary, XL Fleet’s business model revolves around commercial fleet electrification.
As the company puts it, XL Fleet “turns many of the most popular class 2-6 vehicles… into hybrid and plug-in hybrid electric vehicles, without disrupting their performance.”
Sure, special purpose acquisition company (SPAC) stocks are red-hot, and so are electric vehicle stocks. But should investors make room for a sustainable truck modification company in their portfolios?
That’s the billion-dollar question, so let’s start with a closer look at XL stock.
XL Stock At A Glance
You might have noticed that pre-deal SPAC stocks often tend to cling to the $10 level for a while. This is precisely what happened with XL stock, formerly PIC stock, last year.
When merger deals are announced and there’s an electric vehicle connection, oftentimes you’ll see a share-price spike. In the case of XL stock, the bulls pushed the share price up to $14 in November.
Yet that was just the beginning of the incredible bull run. Believe it or not, XL stock rode all the way up to $35 in late December. The angle on that run-up was too steep, though, so some profit taking was inevitable.
On January 8 XL stock closed at $21.24. This represented a nice discount compared to December’s peak price. So if you were waiting for a pullback or concerned about buying during a “manic phase,” now you can get in at a more favorable price point.
Addressing A Fragmented Market
When it comes to providing vehicle electrification solutions for North American commercial and municipal fleets, you’d be hard-pressed to find a better company than XL Fleet. And you’d have an even tougher time finding a company in this highly specific niche that’s tradable on the New York Stock Exchange.
Impressively, XL Fleet’s clients have put more than 140 million miles on the roads. These customers include some very well-known corporations as well as names like Yale University and the City of Boston.
Moreover, the company has the potential to capitalize on a disjointed and perhaps even disorganized emerging market. As XL Fleet founder and Chief Strategy Officer Tod Hynes explains:
“The commercial market for electrified medium to heavy duty vehicles is large, but very fragmented. XL Fleet’s nimble product development approach enables the Company to be very responsive to customer demand, particularly in the Class 5-6 and Class 7-8 ranges where EV options are extremely limited.”
On A Fast Track To Innovation
That’s a roundabout way of saying that few, if any, companies can provide electrification for such a broad array of truck fleets like XL Fleet can.
It’s also unlikely that the competitors can help companies reduce operating costs and meet sustainability goals the way XL Fleet does. As the company reports, XL’s electric drive systems can increase a vehicle’s fuel economy by up to 25% to 50%.
Not only that, but the company’s electric drive systems can help to reduce carbon dioxide emissions by up to 20% to 33%.
That’s going to be practically irresistible to fleet owners and manufacturers seeking to reduce their carbon footprint in 2021.
Notably, Time magazine named XL Fleet’s electric drive system as one of the best inventions of 2019. That’s a clear indication that XL Fleet is on the fast track as an innovator in a market with few viable competitors.
Did XL stock go too high, too fast in December? It certainly appears that way. Yet the subsequent price pullback offers prospective investors a better entry point.
As for the company, XL Fleet offers powerful solutions in fleet electrification. It’s a potentially hyper-growth market with big-name clients. And investors can participate with a position in XL stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.