How Workhorse Has a Path to Its Postal Service Bid

For months, investors have been eagerly awaiting the federal government’s decision on who will win a lucrative contract to replace its aging the U.S. Postal Service (USPS) delivery fleet. One of the options is Workhorse (NASDAQ:WKHS), and WKHS stock stands to benefit in a big way if the company wins the bid.

A Workhorse W-15 hybrid electric pickup truck on display at a branding event in Flatiron Plaza in New York.

Source: Shutterstock

While a final decision hasn’t been made yet, President Joe Biden gave everyone a big hint with some comments he made while signing his “Buy America” executive order.

I’ll give you a hint — things look very, very good for Workhorse stock.

And it doesn’t take a lot to read between the lines on this one.

The Executive Order

Biden has been signing a slew of executive orders since taking office in January. That includes the “Buy America” executive order that he signed on Jan. 25.

That order says when the federal government makes purchases, it buys goods made in the U.S., by American workers and with component parts made the United States.

The order doesn’t address the Postal Service or Workhorse in particular. But when speaking to reporters during the signing ceremony, Biden also disclosed he wants the government to switch to electric vehicle (EV) fleets. Here’s the quote:

“The federal government also owns an enormous fleet of vehicles, which we’re going to replace with clean electric vehicles made right here in America, by American workers.”

In turn, that’s the kind of announcement that WKHS stock investors have been dreaming about. And Workhorse stock shot up 30% on the announcement.

Workhorse and the Postal Service

Workhorse is already one of three finalists for the Postal Service’s fleet replacement contract, which is valued at more than $6 billion and would include 180,000 new delivery vans.

The other two finalists are Karson, which teamed up with Morgan Olson, and Oshkosh, which submitted its bid in partnership with Ford (NYSE:F).

What’s notable is that Workhorse’s bid is the only one of the three to be filled fully with electric vehicles. That said, EVs seem to be an ideal solution the Postal Service’s fleet issues. EVs travel for short distances — filling that last-mile delivery role to bring mail to residences and businesses. And they then return to their home base each day, where they can charge up and be ready to go the next day.

Just as importantly, EVs provide a green solution that is exactly what the new president is requiring of the federal government.

Overall, the timing on this is critical. The Postal Service was expected to sign this contract last year under Donald Trump’s administration. But it recently announced that the decision would be delayed until the second quarter of this year.

Had this decision been made last year — or even a month ago under the Trump administration –Workhorse wouldn’t have the advantage it clearly enjoys now.

WKHS Stock at a Glance

Workhorse stock dipped and rose all through 2020 as Wall Street waited for the Postal Service contract to be awarded. It was a penny stock for the first half of 2020 before the USPS contract became a possibility.

The Cincinnati-based company is expected to announce fourth-quarter and full-year 2020 earnings sometime in March. That said, third-quarter revenue was just $565,000 with a net loss of $84.1 million.

The company also announced it would miss 2020 production targets because of limited battery supplies brought on by the coronavirus pandemic. The only piece of good news was an announcement it sold 500 of its C-1000 EVs to Pritchard Companies.

The Bottom Line on WKHS Stock

No doubt, Workhorse needs the Postal Service contract to break its way. And with a Biden administration and the new president’s public endorsement of an EV fleet, things look very good for Workhorse to get at least a big piece of the Postal Service contract.

Biden will have a lot of explaining to do if the Postal Service chooses a non-EV solution to upgrade its fleet and makes the announcement only a few weeks after Biden expresses his preference for EV vehicles.

WKHS stock has a “B” grade and a buy recommendation in my Portfolio Grader right now.

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


Article printed from InvestorPlace Media, https://investorplace.com/2021/02/biden-paves-the-way-for-wkhs-stock-postal-service-bid/.

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