Some folks prefer to invest in electric vehicles directly, while others would rather focus on the battery systems that power those vehicles. One strategy would be to take a position in Tuscan Holdings (NASDAQ:THCB), which plans to combine with electric-vehicle battery maker Microvast. But, is THCB stock a wise long-term investment?
At the beginning of 2021, I heartily recommended buying the stock while waiting for the special purpose acquisition company (SPAC) deal to close. More recently, Louis Navellier and the InvestorPlace research staff recommended a “be right and sit tight” approach with Tuscan Holdings and Microvast.
It’s not always easy to sit and relax with a stock when it’s volatile, and there’s no denying that THCB stock is a fast mover in both directions. Therefore, this stock isn’t necessarily appropriate for safety-focused investors.
That being said, a small allocation in the stock could be justifiable if you can handle the risks. And, the data does tend to suggest that when it comes to next-generation battery technology, Microvast is a niche leader.
A Closer Look at THCB Stock
For the majority of 2020, THCB stock didn’t stray far from the $10 level. That’s because it was a pre-deal-announcement SPAC stock and the market was awaiting more information.
Once the intent to merge with Microvast was made, the bulls pushed the share price up quickly. By the end of 2020, the stock had already reached $17, though it was a bumpy ride along the way.
The bulls charged ahead in early February, catapulting THCB stock all the way up to a 52-week high of $25.20. Soon, however, investors would learn a lesson that I’ve mentioned many times: chasing stocks after a vertical move isn’t typically a great idea.
Thus, the stock tumbled quickly, settling around $13.30 today. Hopefully, the bulls can stage a comeback and, just as importantly, maintain a more gradual and sustainable upward trajectory.
The Earliest and the Best
Headquartered in Houston, Texas, Microvast specializes in providing battery solutions for commercial electric vehicles.
That appeals to me, as I like companies that pick a niche and focus on it like a laser.
And since Microvast has been around since 2006, we can confidently say that this company is truly an early mover in electric vehicle battery technology.
Today, investors would be hard-pressed to find a publicly tradable company that can beat Microvast in its niche market. The company’s stats are impressive:
- Microvast’s batteries are integrated into almost 30,000 vehicles.
- The vehicles using Microvast’s batteries are running in 160 cities in 19 countries.
- Over 3.8 billion miles have been traveled on the company’s batteries.
- Microvast’s proprietary intellectual property portfolio is protected by more than 550 patents.
Plus, the company’s batteries powered electric buses in the 2018 PyeongChang Winter Olympics. So clearly, Microvast is a known and trusted brand.
Profiting from the Disruption
Let’s not kid ourselves. The era of fossil fuels could be coming to an end in the near future.
Research firm Wood Mackenzie projects that 2025 will be the year when global oil demand declines. Moreover, the researchers forecast that five million barrels of oil per day will be displaced by electric vehicles by 2040.
Also by 2040, 38% of vehicle sales will be electric or hybrid vehicles, according to Wood Mackenzie’s projections.
Moreover, as Microvast reports, “Commercial EV sales currently represent 1.5% of the market but penetration is expected to reach almost 9% in 2025, representing a CAGR of 55%, from 2020 to 2025.”
Government regulations addressing climate change will undoubtedly facilitate this shift towards vehicle electrification, and the sales of Microvast’s fast-charging battery systems are very likely to ramp up as traditional combustion engines are increasingly viewed as obsolete.
The Bottom Line on THCB Stock
What we’re all bearing witness to is the not-so-gradual disruption of a fossil fuels industry that’s in a state of decline.
This change is happening whether you’re ready for it or not. So, why not be prepared in advance?
As an investor, you can capitalize on the big shift away from conventional energy. A simple way to do this is through a long position in THCB stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.