I don’t recommend chasing headlines, but being aware of developments at the government level is essential for investors. This is particularly true when it comes to Workhorse Group (NASDAQ:WKHS) as current events definitely tend to favor a long position in WKHS stock.
President Joe Biden’s administration’s stance towards fleet electrification, and towards green energy sources in general, is quite different from the position held by former President Donald Trump’s administration.
Informed investors should adjust their strategies accordingly. It’s not a matter of whether you agree or disagree with the current government. Rather, it’s about adapting to the market environment that’s in place right now.
As we’ll see, WKHS shareholders have benefited by letting the trend be their friend. And the trend certainly appears to be in favor of clean-energy policy, as well as higher prices in WKHS stock.
A Closer Look at WKHS Stock
Would you believe that WKHS stock was trading at the $3 level just a year ago? Back then, there wasn’t such a strong government push for emission-free vehicles.
It sure would be nice to buy at $3 now, but don’t count on that happening. As of Feb. 5, 2021, the WKHS share closing price was $40.61.
That’s quite an impressive run-up. Mind you, the WKHS stock price was close to $21 at the beginning of 2021. So, there’s no question that the bulls are fully in charge of the price action at this point.
Just as a note of caution, I wanted to point out that Workhorse stock has trailing-12-month earnings per share of -$2.65. I would like to see that number turn positive in the coming months. So, I recommend that WKHS investors should keep an eye out for that.
The Biden Push
On Jan. 26, the Biden administration made it crystal clear that it’s seeking to replace internal combustion engine-powered vehicles in government fleets with electric vehicles.
With that, pretty much every stock related to electric SUVs, trucks and delivery vans posted strong gains. WKHS stock, in particular, rose 25.88% upon Biden’s announcement.
It’s tempting to say that we should have seen this coming and invested in WKHS stock months ago. But there’s no point in fretting over what we ought to have done. We have to work with what’s happening now.
And right now, the Biden administration is effectively giving the green light to buy and hold fleet electrification stocks, such as Workhorse stock. As evidence of this, consider the president’s statement:
“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.”
Implications for the USPS Contract
The Biden administration’s intentions are unmistakable. Yet the president didn’t say outright that Workhorse is going to win the huge $8.1 billion USPS fleet upgrade contract that’s up for grabs.
On the other hand, investors need to read between the lines sometimes and Workhorse would be a perfect fit for the Post Office’s likely imminent fleet electrification.
Workhorse has two vans, the C-650 and C-1000, which are ideal for the Post Office’s delivery requirements. A look at the van designs shows they were tailor made for delivery.
Besides, Workhorse isn’t new to this niche. The company’s been in business since 2007, as AMP Electric Vehicles. We’re not talking about some conventional automaker that’s scrambling to adapt to new clean-energy requirements.
The Bottom Line
The president’s mandate for zero carbon vehicles is unmistakable, and today’s stock-market investors must be willing to make adjustments to their portfolios when needed.
One way to adapt is by taking a position in WKHS stock. There’s no point in fighting the bullish trend on this. After all, Workhorse is an ideal candidate to help fulfill Biden’s ambitious vision.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
