Workhorse Group (NASDAQ:WKHS) stock is certainly an intriguing growth pick today. This is a stock that has whipsawed in incredible fashion this year.
Like other high-profile favorites of retail investors, WKHS stock got bid up from the $3 level one year ago to above the $40 level in February.
Since then, shares have dropped by nearly 75% to just $11 per share at the time of writing.
It appears the once-persistent momentum giving EV investors a market-beating edge is starting to slow.
That said, there’s a reason why this stock is generating interest right now. Let’s dive into what this company does, and how it’s been performing of late.
A Closer Look at WKHS Stock
Workhorse describes itself as the “future of delivery.” The company’s delivery vans are 100% electric, with a purpose-built design allowing for maximum cargo space and easy access for the driver. As far as functionality goes, Workhorse’s product line appears to be very attractive.
Additionally, Workhorse has been at work on providing value-added technological enhancements. These come via the company’s proprietary Metron AP telematics system. This system allows owners to manage their fleet via a multi-platform application.
Knowing where their vans are at all times, and maximizing routes carries a lot of value for Workhorse’s clientele.
Accordingly, it’s no surprise Workhorse’s C-Series vans have attracted some decent-sized orders of late. In January, the company announced an order of 6,320 vans. This is more than the company planned on producing in 2021. Cue the skyrocketing share price in January.
Since then WKHS stock has been on quite the downward trajectory. Bearishness among investors in the EV space is one factor, but that’s plagued this sector broadly of late. However, Workhorse also lost out on a major postal contract to Oshkosh Defense in late February. This has been a key catalyst for the recent drop in WKHS stock.
Indeed, as a company that’s still getting production figured out, orders are what matters right now. Accordingly, investors seem to be shying away from this stock on a lack of order flow of late.
Valuation Suggests There’s Room to Be Optimistic
At around $10 per share, WKHS stock currently carries a valuation of about $1.4 billion. In the EV space, Workhorse is still a tiny player among some pretty large giants. This could provide the right kind of setup for long-term growth investors looking for value in this space right now.
Based on forward revenue estimates of $282 million in revenue for 2022, WKHS stock trades at about five times sales. That’s not incredibly expensive for a growth play in the EV sector with an e-commerce catalyst overlay.
Additionally, Workhorse reported a cash position of $215 million during its recent earnings release. There’s some indication this cash should provide the short-term growth capital sufficient for the company’s needs in the short term. Having a war chest is a good thing, and Workhorse doesn’t look like it will need to raise capital in the near term.
The company’s recently reported earnings do show some revenue on the books, though not much. The company reported $1.4 million in revenue for 2020, though revenue is expected to ramp up significantly in the quarters to come. Workhorse is still in ramp-up mode, and investors buying this stock aren’t doing so on the basis of backward-looking results.
That said, the fact this company is generating revenue is positive. As order flow increases alongside production, investors are hoping to ride this wave higher into 2022 and beyond.
Prominent investors are starting to jump aboard WKHS stock on these dips. Recent buying from Cathie Woods has sparked interest among retail buyers looking for “cheap” growth stocks. Indeed, WKHS stock does seem attractive, when compared to its EV peers today on the basis for forward-looking projections.
Indeed, Workhorse focuses on providing the last mile of delivery in a way that’s as environmentally friendly as possible. Given the surge in e-commerce and long-term growth prospects of this sector, investors are looking for ways to leverage the logistics and distribution surge that will follow. Doing so via an EV option seems like a good idea.
Investors considering WKHS stock certainly appear to have a value-based reason to do so. However, averaging in over any dips that may occur may be the best route with this stock right now, given the selling pressure we’ve seen among EV stocks of late.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.