Buy Naked Brand Stock Ahead of the Electrifying Cenntro Merger

Advertisement

Last month, news of a game-changing merger between Naked Brand Group (NASDAQ:NAKD) and electric vehicle (EV) company Cenntro gave NAKD stock a short-lived pop in price. However, not too long after that, shares began to go in reverse — and then some.

a charging station for an electric vehicle (EV)
Source: Shutterstock

Trading for around 75 cents per share after the deal news, NAKD has since fallen to around 50 cents. But it’s not as if investors have completely forgotten that this e-commerce play is within weeks (pending shareholder approval) of becoming an electric vehicle play.

Like other growth names, EV stocks have sold off lately. Recent market volatility has hit growth stocks hard, including names in this space. As a result, the market isn’t rushing into them right now. There is, however, a silver lining to this near-term pain: beaten down due to the market selloff, you can lock down a long-term position today at a favorable entry point.

Yes, as an early stage vehicle electrification company, there’s a lot of uncertainty here. But unlike some other EV startups, this one has moved well past the concept stage and is already producing vehicles. More promising than its low share price would suggest, consider now a great time to buy NAKD stock.

NAKD Stock and the Cenntro Deal

So far, investors have had a mixed reaction to the Naked Brand-Cenntro deal — again, mostly due to short-term volatility. However, this latest wave of uncertainty will pass. After that, EV stocks will resume attracting a lot of interest from investors.

Once that happens, there’s a good chance NAKD stock won’t stay at the bargain basement prices it is at today. Why? Sure, its merger partner isn’t exactly a household name. Focused on producing commercial delivery vehicles, Cenntro will likely not become one anytime soon, either.

But be that as it may, I wouldn’t view this as a reason to dismiss its long-term potential. In fact, the company’s focus on a more niche area of EVs may be its ticket to success. And that’s not all. The EV startup has also made far more progress than other small startups trying to find success in this fast-growing industry. Cenntro is on track to generate $25.3 million in revenue this year from the sale of 1,500 vehicles. It’s already delivered 3,300 electric vehicles to date.

Following this initial success, Cenntro is ready to take things to the next level. Better yet, with Naked’s $270 million war chest, it will have the cash to do so as well. What will the “next level” entail? Think a leap from millions to billions in sales, all within a short span of time.

Big Upside if Expansion Plans Pay Off

Already operating in 32 countries and with more than 6 assembly plants up and running, Cenntro is off to a great start. It’s more than ready to level up — and it’s leveling up in a big way, once its new Jacksonville, Florida production facility opens early next year. Within four years, it anticipates producing more than 50,000 of its commercial EVs annually from this facility.

Put simply, this expansion effort could pay off quickly. Per projections, the company expects to generate $506 million in sales next year and $2.1 billion in sales by 2023. Obviously, targeting $2.1 billion in revenue within two years and actually hitting this goal are two separate things. Yet, considering the niche it’s targeting — EVs for the last-mile delivery of packages — and its continued success locking down big customer orders? I wouldn’t put it past them.

So, what does this mean for shares if the deal goes through and expansion plans go off without a hitch? Per the terms of the merger, existing NAKD shareholders will own 30% of the combined company. Cenntro’s existing investors will hold the other 70%.

That gives this deal an implied valuation of about $1.7 billion. Compared to its above-mentioned 2022 sales projections, this is an absolute steal next to comparable plays in the space. If Cenntro manages to hit its ambitious revenue target, you can expect NAKD stock to see the same high-level enthusiasm it experienced back in its meme-stock days, when it zoomed to prices well above present levels.

The Verdict on Naked Brand Stock

Coming in with an “A” rating in my Portfolio Grader, this is a high-risk, high-potential opportunity hiding in plain sight.

For now, market uncertainties are putting pressure on speculative growth stocks. That may mean shares stay at depressed prices in the immediate term.

Still, these uncertainties will pass. As it becomes more clear that Cenntro will hit its nine-figure revenue target for 2022, NAKD stock won’t stay stuck under $1 per share for long.

FREE REPORT: 17 Reddit Penny Stocks to Buy Now
Thomas Yeung is an expert when it comes to finding fast-paced growth opportunities on Reddit. He recommended Dogecoin before it skyrocketed over 8,000%, Ripple before it flew up more than 480% and Cardano before it soared 460%. Now, in a new report, he’s naming 17 of his favorite Reddit penny stocks. Claim your FREE COPY here!

On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

Read More:Penny Stocks — How to Profit Without Getting Scammed

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, who has been called “one of the most important money managers of our time,” has broken the silence in this shocking “tell all” video… exposing one of the most shocking events in our country’s history… and the one move every American needs to make today.


Article printed from InvestorPlace Media, https://investorplace.com/2021/12/buy-nakd-stock-ahead-of-the-electrifying-cenntro-merger/.

©2024 InvestorPlace Media, LLC