Workhorse Group (NASDAQ: WKHS) stock has continued its strong run, rising by about 57% over the last 5 trading days. In fact, the stock is up by about 21% since our last update on January 28, when we indicated that the stock had more room for near-term gains. There are a couple of factors driving the surge. Firstly, it appears that the company’s odds of winning a $6 billion-plus fleet upgrade contract for the U.S. Postal Service have improved (see our update below, for more details). Secondly, short interest in the stock is also quite high at about 30% of the total float and this could be causing social media-driven traders (similar to Reddit/GameStop) to buy into the stock to put pressure on short-sellers. So, is Workhorse stock poised for further gains after such a large rally? It seems likely. Per our machine learning model, which analyzes 5 years of stock price data, Workhorse Group (WKHS) stock has a 61% chance of a rise over the next month (21 trading days). See our analysis Is Workhorse Stock Poised For Further Gains? for more details.
[1/28/2021] Why Workhorse Stock Looks Set For Further Gains
Workhorse Group (NASDAQ: WKHS), a company that makes electric commercial-delivery vans, saw its stock price rise by 30% on Tuesday, with its total year to date gains in 2021 standing at around 60%. The recent rally comes as President Joe Biden noted that he intends to replace all federally owned vehicles with American-made electric vehicles. This should come as a shot in the arm for Workhorse, whose prospects largely hinge on its bid to upgrade the U.S. Postal Service’s aging fleet of mail trucks. The $6 billion-plus fleet upgrade contract has only two other contenders, namely Karsan, a Turkish company, and Oshkosh, which is working with Ford on an internal combustion engine-based solution. Now Workhorse should have an edge in securing the contract, given that it is the only American bidder with an all-electric option.
So is Workhorse stock primed for further gains? It looks quite likely. Based on our machine learning model, which analyzes 5 years of stock price data, Workhorse Group (WKHS) stock has a 73% chance of a rise over the next month (21 trading days). (Related: Is Workhorse Stock Poised For Further Gains?) The longer-term outlook for the stock could also be bright if it secures the USPS deal. While the stock trades at around 30x consensus 2021 Revenue, there is a lot of room for growth. The last-mile package delivery segment appears to be an ideal application for electric vehicles for a couple of reasons. There could be real cost savings in terms of fuel and maintenance costs for businesses. Range anxiety – which is a common concern for passenger EVs – is also lower considering that these vehicles typically take a pre-planned, predictable route. Workhorse, being one of the few US-based commercial EV players could stand to benefit considerably as the market expands.
While Workhorse stock may have moved, 2020 has created many pricing discontinuities that can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for General Motors vs Comcast.
See all Trefis Price Estimates and Download Trefis Data here
What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
