At this point, the trend toward special purpose acquisition companies (SPACs) has gone too far. Investors seem to be catching on.

Maybe it was the massive pre-announcement rally in Churchill Capital IV (NYSE:CCIV) — a rally which made no sense at the time — and the subsequent plunge that has highlighted how risky pre-merger SPACs can be.

Or, maybe it was the staggering number of SPACs joining the market. According to SPAC Track, the total capital raised through Mar. 16 is now greater than that for all of 2020. Moreover, 2020’s total was over six times that of the year before.

At a certain point, though, there’s just too much money chasing too few good ideas. And with so many SPAC management teams now including celebrities, politicians and athletes with little-to-no business experience, it’s difficult to have confidence that newer SPACs can manage the more challenging environment.

Whatever the cause — and it’s likely a confluence of these and other factors — many SPAC stocks have pulled back. Plus, many more probably have additional downside ahead. More and more, it looks like it the SPAC trend may have peaked.

But that doesn’t mean that all SPACs are heading to zero — or are even overvalued. For a few, the broader pullback in the group has created a buying opportunity. So, investors willing to gamble — either that the worst is over or that the best SPACs can survive a bigger shakeout — should consider these eight names:

• Ares Acquisition (NYSE:AAC-U)
• New Providence Acquisition (NASDAQ:NPA)
• Foley Trasimene Acquisition (NYSE:WPF)
• Arctos Northstar Acquisition (NYSE:ANAC-UN)
• Northern Star Investment II (NYSE:NSTB)
• Tortoise Acquisition II (NYSE:SNPR)
• Artius Acquisition (NASDAQ:AACQ)
• Revolution Acceleration Acquisition (NASDAQ:RAAC)

8 SPACs Worth a Gamble: Ares Acquisition (AAC.U)

Until recently, SPAC stocks quite regularly soared above their redemption price (almost always $10) even before mergers were announced. For instance, CCIV stock cleared $50. Many others saw moves to the mid-teens or higher.

However, many of those rallies have reversed because overpaying for equity in a SPAC is dangerous. The SPAC structure itself contains a fair amount of dilution that’s not obvious at first glance.

Founders get a large chunk of stock — as much as 20% of the SPAC — for nominal consideration. And, in the initial public offering (IPO), investors receive units which include both shares and a fraction of a warrant (usually one quarter).

In other words, paying even $10 for a SPAC share only gives claim to often as little as $8.50 per share in cash or less. That hidden dilution makes it obviously risky to pay $13 or $15 for the same share. Just to support that price, the deal must create a significant amount of value. And in turn, that value has to come from the target agreeing to merge at what must seem to it like a low valuation.

With the pullback in SPACs, however, there are units available at basically the IPO price. Ares Acquisition is one of those names. Ares hasn’t announced a target yet, but individual investors can buy the units — currently at $10.05 — for essentially the same price paid by institutional investors in the AAC.U stock IPO.

With those units, they’ll invest alongside private equity giant Ares Management (NYSE:ARES), which should be incentivized to get the best deal. And with the price just above $10, investors can also take advantage of the redemption feature if the deal looks unattractive. All told, Ares Acquisition seems to offer individual investors the good side of a SPAC deal.

New Providence Acquisition (NPA)

To be fair, the SPAC boom isn’t all bad. Individual investors have gained access to early-stage growth companies that’s often reserved for institutional investors. And there have been a few big winners, such as Draftkings (NASDAQ:DKNG), Quantumscape (NYSE:QS) and Virgin Galactic (NYSE:SPCE).

But there are still more intriguing businesses going public via SPACs in industries like electric vehicles (EVs) and software. One of those intriguing businesses is AST & Science, which is merging with New Providence Acquisition.

Working in a more traditional industry, AST’s business plan is simple: build a satellite-based mobile network, initially along the Equator. Just in that region, the company sees an addressable population of 1.6 billion people to whom it can provide mobile services.

Additionally, AST’s partnership with British telecommunications giant Vodafone (NASDAQ:VOD) gives a positive imprimatur to the effort. Plus, the merger will give AST almost half a billion dollars in capital with which to build out its network. The pullback to $12.25 makes the stock price more reasonable as well.

Of course, as with all early-stage companies, there are risks. Most notably, satellite companies have been notorious graveyards for investor capital. AST’s competition is entrenched and will be stiff. Still, NPA stock is an intriguing high-risk, high-reward play.

Foley Trasimene Acquisition (WPF)

As I’ve written before, the case for WPF stock is relatively simple. Investors in WPF are riding with Bill Foley, one of the best businessmen of his generation. Between Fidelity National Information Services (NYSE:FIS), Fidelity National Financial (NYSE:FNF), Black Knight (NYSE:BKI) and other vehicles, Foley has made literally tens of billions of dollars for investors over the last three and a half decades.

However, that track record hasn’t done much for WPF, which has drifted back toward $10. The stock initially popped in January after this one of the SPACs announced its merger with “human capital” software provider Alight Solutions. Since then, though, investors have preferred Foley Trasimene II (NYSE:BFT), another attractive play which is merging with payments company Paysafe.

Admittedly, Foley himself questioned the SPAC boom this month. He’s also capitalized on it, as his Cannae Holdings (NYSE:CNNE) is merging risk-analytics firm Qomplx with Tailwind Acquisition (NYSE:TWND). But as far as WPF goes, investors get access to a Foley deal at what’s now a very modest premium. History suggests that might well be a good deal.

Arctos Northstar (ANAC-UN)

To be clear, ANAC-UN stock might not be a good investment. But it could be a fun ride.

Currently, Arctos Northstar units are selling right at $10, which at least suggests that investors aren’t paying a premium. Meanwhile, Arctos plans to target the sports and entertainment industries. It’s the former that seems most likely, though. Why? The SPAC’s CEO is Theo Epstein, former general manager of the Boston Red Sox as well as former President of the Chicago Cubs.

Surprisingly enough, Arctos Northstar actually isn’t the only sports-focused SPAC out there. Sports Ventures Acquisition Corp. (NASDAQ:AKIC) trades below $10 and is led by a minority owner of the NFL’s Atlanta Falcons. Sportstek Acquisition (NASDAQ:SPTKU) has also cited sports franchises as potential targets, though it’s not clear how such a deal would work out in practice. Finally, Redball Acquisition (NYSE:RBAC) reportedly had talks to acquire the Red Sox that eventually fell through.

Again, investors can’t buy one of these SPACs and expect to own a share of a professional sports team a year from now. However, all four are trading near their IPO price. What’s more, before a merger announcement, every SPAC is essentially a shot in the dark. So, if you’re willing, there’s nothing wrong with a little excitement in the process.

Northern Star Investment II (NSTB)

When it comes down to it, NSTB stock is for market bulls only.

Northern Star Investment II is merging with Apex Clearing, which provides custody and clearing services for brokerages and other financial companies. Apex is, as CEO Bill Cappuzzi puts it, “the fintech for fintechs.”

There’s a huge opportunity here if markets cooperate. Apex should benefit from its exposure to cryptocurrency trading, particularly if more platforms — such as legacy stock brokerages — move into that business. Higher volumes at the likes of online broker Robinhood would be a help, too. Apex even believes it can tackle the stock settlement issues that led Robinhood and others to restrict trading in stocks like Gamestop (NYSE:GME) and AMC (NYSE:AMC) earlier this year.

Plus, unlike a lot of companies merging with SPACs, Apex Clearing is already profitable. With NSTB stock pulling back toward $10, valuation is reasonable as long as growth continues. Again, that may depend on the market. But as long as equity and crypto volumes stay elevated, this pick of the SPACs should be a winner.

Tortoise Acquisition II (SNPR)

There are a few blank-check companies out there that seem to have simply announced their mergers at the wrong time. Tortoise Acquisition II looks like one of those names.

When the first Tortoise SPAC announced its merger with natural-gas truck manufacturer Hyliion (NYSE:HYLN) in June, its stock soared above $30 in weeks, eventually topping out above $50. Admittedly, HYLN stock is now below $13, but traders still certainly made a killing.

In contrast, though, Tortoise Acquisition II disclosed last month that it was tying up with EV charging station developer Volta. SNPR stock made it to $18 on the news, but it has steadily declined since. Currently, SNPR sits just below $11.

Obviously, the environment for SPACs — and electric-vehicle SPACs in particular — is very different. And, given the overwrought rallies in HYLN, QS, Nikola (NASDAQ:NKLA) and other names, it probably should be very different. But that doesn’t mean there’s no value in these early-stage EV plays.

Plus, Volta has an intriguing case. Certainly, the charging-station market is crowded. But the company believes its focus on commercial customers can make it stand out. And, while an estimated $25 million in 2020 revenue isn’t a huge total, it’s actually larger than some other EV charging stocks with higher valuations — such as Blink Charging (NASDAQ:BLNK).

Again, EV SPACs almost certainly ran too far last year. But that doesn’t mean SNPR is worthless now.

Artius Acquisition (AACQ)

Like SNPR, Artius Acquisition seems to be another case of unfortunate timing. Its merger with Origin Materials probably would have been met with cheers had it been announced in 2020. This February, though, it garnered only a short-lived pop.

However, there’s an intriguing story here. Origin is looking to develop so-called “carbon negative” materials, which can replace plastics with wood residue. What’s more, Origin sees a $1 trillion total addressable market (TAM) here. And, although too many SPACs are citing enormous TAMs and disregarding the difficulty of actually penetrating them, the core point is important. If Origin’s technology can succeed, the company has the opportunity for enormous growth.

That’s obviously a huge “if,” though. Even near $10, AACQ stock is still a high-risk, high-reward play. But that’s precisely the kind of play to buy when investors are more focused on the risks than the rewards.

Revolution Acceleration Acquisition (RAAC)

Beyond being one of the SPACs, Revolution Acceleration Acquisition is also one of the more intriguing robotics stocks on the market right now.

As I wrote a few days ago, there aren’t currently a lot of robotics pure-plays out there. However, RAAC stock will join that list once it closes its merger with Berkshire Grey.

Like Origin Materials, Berkshire Grey is also talking up an exceptionally large TAM — about $280 billion. But, as with Origin and AACQ, the point isn’t necessarily the actual number. Instead, it’s the immense opportunity.

Can Berkshire Grey capitalize on the massive TAM of supply-chain automation? Obviously, that remains to be seen. But that’s also the promise — and peril — of SPAC investing in a nutshell.

On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

After spending time at a retail brokerage, Vince Martin has covered the financial industry for close to a decade for InvestorPlace.com and other outlets.