Are These The Best SPAC Stocks To Buy With Massive Potential Upside?
2020 has been a banner year for special purpose acquisition companies, more commonly known as SPACs. Over 180 SPAC stocks have come to the stock market this year bringing gross proceeds around $65 billion and with an average listing size of $361.1 million, according to a report done by SPAC Insider. While this may be something new to veteran investors, many investors actually encountered this term for the first time earlier this year. That’s not surprising with the surge in retail participation in the stock market today.
What Is A SPAC & Why You Should Consider Them?
A special purpose acquisition company (SPAC) is a company with no commercial operations. It is structured strictly to raise funds through an initial public offering (IPO). Some also refer to them as blank cheque companies. With the capital raised, a SPAC then identifies a private company to merge with. This essentially provides a faster way for a private company to go public, without the traditional, more lengthy IPO process.
The truth is, SPACs have been around for a few decades now. A possible reason they are getting popular again this year could be to do with the electric vehicle (EV) revolution we are experiencing in the stock market today. If you have only gotten to know SPACs this year, chances are the ones that you know are in the EV space. Recall that Tesla’s (TSLA Stock Report) stock price went through the roof earlier this year. And that has led to a number of EV SPACs cashing in the red hot market at that time. While most EV SPACs have brought good returns to shareholders in recent months, we don’t know if the party can go on forever. Nevertheless, investors should take note that not all SPACs are created equal. There’s a chance you could lose money without proper research and due diligence.
While it is the EV stocks that dominate SPAC headlines this year, there are also SPACs in the other sectors that are thriving. With all that in mind, are these the best SPAC stocks to buy right now?
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Best SPAC Stocks Of 2020: DraftKings
With sports betting possibly becoming a $40 billion business, online gaming giant DraftKings (DKNG Stock Report) is in an excellent position to benefit from the shift to online casinos as more people are increasingly placing bets using their phones. According to investment firm Piper Sandler, DraftKings and Penn National Gaming (PENN Stock Report) are poised to take a substantial market share of the growing online betting market.
In April 2020, DraftKings went public via a $3.3 billion merger with the SPAC Diamond Eagle Acquisition Corp. Since then, the stock has gained over 200%. The potential of online gaming is certainly there. For instance, New Jersey is the biggest online sports betting and gaming market. In October alone, sports wagers exceeded $800 million in the state. And the leaders in that market are none other than DraftKings and its rival FanDuel. The question is, would you bet on this SPAC stock for its huge long-term potential as the industry continues to flourish?
Best SPAC Stocks Of 2020: Fisker Inc.
Amid the EV revolution, chasing the high price tag of Tesla need not be the game in the stock market today. Investors that have been looking for the best EV stocks to buy are starting to pay more attention to Fisker (FSR Stock Report), which went public via a SPAC merger last month. Admittedly, FSR stock is trading only at a fraction of Tesla’s stock price. Besides, like many EV SPACs, Fisker hasn’t actually started production. But Fisker could offer a higher potential upside than Tesla if its plans materialize.
Fisker was founded by Danish automotive designer Henrik Fisker. He is best known for designing luxury cars such as the legendary BMW Z8 and Aston Martin DB9. Fresh of its merger with Spartan Energy Acquisition, investors are now anticipating Fisker’s brand of EVs. With the completion of the merger, Fisker has in excess of $1 billion of cash on the balance sheet. This will fully fund Fisker’s operations and development of the Fisker Ocean SUV. Since going public on the New York Stock Exchange, the stock has gained more than 40% in a month. Is FSR stock one of the most exciting EV stocks to watch in the market today?
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Best SPAC Stocks Of 2020: Virgin Galactic
It’s been about a year since spaceflight company Virgin Galactic (SPCE Stock Report) became public. The transaction was facilitated through the merger with the Social Capital Hedosophia SPAC. SPCE stock has climbed nearly 100% year-to-date. Earlier this month, Virgin Galactic reported its third-quarter results. The company reported a loss of 34 cents a share. That was considerably more than analysts’ consensus of a loss of 26 cents.
Understandably, investors didn’t find the financials pleasing. Nevertheless, it is the development and timelines of the launch of its services that investors are more interested in. Sure, the recent postponement of VSS Unity rocket that was supposed to launch on November 19-23 has dampened investors’ spirits. The saving grace is that Virgin Galactic has made progress in the development of SpaceShipTwo. This could complete in the first quarter of next year. With the company regaining interest in recent weeks, will SPCE stock provide outsized returns in the decades to come?
Best SPAC Stocks Of 2020: Workhorse Group
You may have heard of the electric utility vehicle company Workhorse Group (WKHS Stock Report). However, the reason it is on this list of the best performing SPAC stocks in the stock market this year is different from what you think. You see, Workhorse has a 10% stake in electric pickup truck company Lordstown Motors.
Now, Lordstown Motors is merging with the SPAC DiamondPeak (DPHC Stock Report). Investors couldn’t contain their excitement as Workhorse’s shares in Lordstown could now be worth considerably more. Year to date, WKHS stocks are up a jaw-dropping 739%, making it easily one of the best performing SPAC stocks in the stock market today.
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Best SPAC Stocks Of 2020: Repay Holdings
Digital payments software provider Repay Holdings (RPAY Stock Report) is another SPAC stock worth mentioning. The company has been on an acquisition spree which allows it to grow at a fast pace. What’s more, it is able to leverage the synergies between the various components that it has put together. You can see why the company has got a decent runway ahead to grow its business.
The transition toward digital payment solutions was evident in Repay’s third-quarter results. Card payment volume increased 44% year-over-year to $3.77 billion. Revenue was $37.6 million, a 43% improvement from the year-over-year. Gross profit for the quarter also increased 40%% year-over-year to $27.1 million. The company generated $0.85 million in cash flow from operations. The company’s stock price has surged more than 90% from its March low. With the increasing adoption of cashless payments, can we expect RPAY stock to bring great value to its shareholders?