2 Penny Stocks to Make You Forget About Buying ElectraMeccanica Vehicles Stock

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InvestorPlace contributor Joel Baglole recently named seven of the best penny stocks to buy now. One of the list’s names was Vancouver-based Electrameccanica Vehicles (NASDAQ:SOLO), the single-seater trading under the  SOLO stock ticker.

The Solo vehicle from Electra Meccanica Vehicles (<a href=

Electrameccanica is the people behind the SOLO single-seat electric commuter vehicle that can go 100 miles on a single charge.

Electric vehicles are all the rage these days — Nio’s (NYSE:NIO) up more than 500% year to date through Oct. 20 — so it’s understandable why investors are excited about the company’s potential.

And while I get the interest — anything electric catches my attention these days — I have a hard time recommending a stock trading below $5 unless it’s got a reasonable pathway to profitability. Having produced 64 prototypes with no sales to date, I can understand why InvestorPlace’s Chris Markoch recently said SOLO stock is a big gamble.

He recommended that investors wait until Electrameccanica starts delivering vehicles before buying its stock. Frankly, I don’t know why he didn’t just recommend that investors buy NIO stock instead. At least it’s on course to make money in 2021 or 2022. 

My Thoughts About SOLO Stock

I’ve written about SOLO on two occasions in 2020. The first was in July; the second was in September. 

“As investments go, I wouldn’t bet on Electrameccanica, but that doesn’t mean you shouldn’t,” I wrote on July 22.

My argument against it had mostly to do with the fact that it was going after a commuter market that might not exist after Covid-19 gets done with the world. At the very least, it’s a tough sell. 

In my second, I suggested two microcaps that were better investments if you wanted to make money on a stock with a $170-million market capitalization.

The first recommendation was a special purpose acquisition company: Schultze Special Purpose Acquisition Corp. (NASDAQ:SAMA). At the time, the SPAC had recently announced its combination with Clover Leaves International, a Latin American medicinal cannabis producer.

On Oct. 1, the SPAC’s shareholders voted to extend the date by which it had to consummate a deal to the end of the year. SAMA stock’s gone sideways ever since. I’m sure it will move higher once the combination is completed.

The second recommendation was Lakeland Industries (NASDAQ:LAKE), an Alabama company that makes protective clothing for firefighters, oil and gas workers, etc. At 1.3 times sales and delivering long-term returns for its shareholders — up 18.5% annually over the past five years — it seemed like a much safer play. 

Since Sep. 4, it’s up 16% on outstanding second-quarter results that included a 27.5% increase in sales and a 588.2% increase in earnings per share.    

“Our Company has just set a new standard of excellence for PPE manufacturers anywhere in the world. Following our fiscal 2021 first quarter that was extraordinary with record-setting financial results, we just exceeded that as measured by key performance measures,” stated chief executive officer Charles Robertson in its Sep. 9 press release. 

I continue to like both of these stocks. However, they both trade over $5. I suggest you check them out.

Two Penny Stocks Worth a Look 

In the meantime, the headline did say I’d make you forget about Electrameccanica. So, without going into too much detail, here are two penny stocks worth considering under $5.

My first pick is the Finnish telecom giant Nokia (NYSE:NOK). In my last article about the company in early October, I suggested that patient investors buying NOK stock in the $3s would be rewarded for its 5G efforts. Long-term, $6 is a realistic target. As I write this, it’s trading at about $4.20.

If you buy now, by this time in 2022, you very well could be sitting on a 40% return over two years. That doesn’t include a potential resumption of its dividend in 2021. 

My second pick isn’t all that original. It’s Coty (NYSE:COTY), the beleaguered beauty company that my colleague picked as one of his seven penny stocks. Currently trading around $3.24, it’s down 70.4% year to date. 

However, I like Coty because it has a top-notch woman running the company, it has some excellent partnerships and strong ownership. 

“Between Coty’s 51% interest in Kylie Cosmetics and a 20% stake in Kim Kardashian’s KKW Beauty, Nabi will have lots of tools to work with as she attempts to return Coty to the top of the beauty world,” I wrote on Oct. 11. 

“Down 75% year to date, Coty’s got nowhere to go but up. With a woman of Nabi’s talent in charge, shareholders can expect the culture shift at the company to make a big difference.”

I continue to like the stock’s chances in 2021. 

So, there you have it, a total of four stocks that could outperform SOLO stock over the next year without nearly as much risk.

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

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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