Electric vehicle stocks have been on fire, with no signs of slowing. In fact, since May, Workhorse Group (NASDAQ:WKHS) stock is up 548%. Tesla (NASDAQ:TSLA) is up 164% and Nio (NYSE:NIO) is up 345%.
While many look a bit frothy after such big runs, there’s still far more upside remaining, especially for Workhorse Group. In fact, I believe the WKHS stock could double with a good deal of patience for a few reasons.
Here are three of them.
The EV Boom Is Alive and Very Well
Global demand for such vehicles is only expected to grow.
According to the International Energy Agency, we could see about 130 million EVs on the road by 2030, a monumental move from 5.1 million in 2018.
Plus, according to Wedbush analyst Dan Ives:
“We continue to believe [electric vehicle] demand in China is starting to accelerate in July/August with Tesla competing with a number of domestic and international competitors for market share with Giga 3 remaining the linchpin of success which remains the prize that [Chief Executive Elon] Musk and Tesla are laser focused on capturing.”
Workhorse Is Already Seeing Solid Contracts
Just weeks ago, the company announced a contact with Ryder (NYSE:R), which will begin using C-Series Workhorse all-electric step vans.
“We see immediate opportunities for customers to realize the benefits of our electric vehicles and turnkey infrastructure model, starting with the Workhorse C-Series van, as it fulfills a huge need in this new economy where demand for electric last mile delivery vehicles continues to increase,” said Ryder senior director Chris Nordh.
There’s also a slight chance it could win part of a $6.3 billion contract with the U.S. Postal Service. According to Fox Business contributor Gary Gastelu, “Approximately 180,000 vehicles will be purchased over five to seven years at a cost of $6.3 billion.”
At the moment, there are reportedly three finalists USPS is looking into. Those include Karsan/Morgan Olsen, Oshkosh/Ford (NYSE:F) and Workhorse Group.
Last-Mile Delivery Is an $18 Billion Opportunity
Last-mile delivery – the movement of goods from a hub to destination – gives the company exposure to an $18 billion market.
In fact, according to Workhorse, it’s a “market leader, first mover and only U.S. pure play OEM in medium duty electrification for last-mile delivery in $18B delivery/ cargo van market with significant EV demand.” In addition, according to the company, 350,000 last-mile delivery vehicles are bought by U.S. fleets every year.
Better, according to InvestorPlace contributor Luke Lango:
“Roughly 75% of America’s 350,000 annual last-mile delivery van market could be electric by 2030, for total annual deliveries of over 260,000. Given its early leadership and competitive advantages, Workhorse could easily grab 10% of that market.”
Better, Workhorse could see further upside from its partnership with Lordstown Motors. At the moment, that company has more than 27,000 pre-orders worth more than $1.4 billion in potential revenue.
The Bottom Line on WKHS Stock
There are plenty of catalysts that have the potential to drive big growth in the WKHS stock. It already inked a deal with Ryder, and there’s hope it can win the contract with USPS. There’s also plenty of growth with final destination vehicles, too.
In addition, Cowen analyst Jeffrey Osborne is impressed by the WKHS stock. “The [second half production] ramp remains on track and management continues to target [making] 300 [to] 400 vehicles by the end of the year. After a tough few quarters, we see greener pastures ahead.”
Osborne also raised his target on the WKHS stock to $20 from $11.50 and maintained a buy rating. While WKHS won’t be a $2,000 stock like Tesla was before its recent stock split, I could see it doubling over the next several months, if you have the patience. I’d personally buy the dips, and hold.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
