SSeveral factors affect stock prices. Some of them, such as macroeconomic and industry factors, are largely outside the control of the company. However, company-specific factors, which are a key driver of any company’s stock price, are largely within the control of its management. When the market feels that a company is not on the right growth path, that sentiment is reflected in its stock price.
However, the share price may rise if the company’s performance improves. Thus, a drop in prices can present a great opportunity to buy stocks at bargain prices. Notably, not all stocks whose prices have fallen are buys.
Here are three businesses that seem to have a good chance of succeeding in the future. If that happens, their stock prices could recover from their current levels, generating handsome returns for their investors.
Stock of a solid state battery technology company QuantumScape (NYSE:QS) is trading near its all-time low. QuantumScape’s stock rose sharply after its November 2020 IPO. The company is developing lithium-metal batteries that are said to be much more energy-dense than the lithium-ion batteries commonly used today. Additionally, QuantumScape expects its batteries to also cost less than lithium-ion batteries. If successful, QuantumScape’s batteries could significantly improve the range and performance of electric vehicles.
volkswagen, which has invested $300 million in the battery company, and a stellar management team have gotten investors excited about QuantumScape. The company’s board members have a wealth of experience in the automotive sector. Among others, QuantumScape has JB Straubel, You’re here‘s co-founder, to its board of directors. Straubel served as Tesla’s chief technology officer from 2005 to 2019.
After the euphoria that followed QuantumScape’s listing, investors have likely realized the many risks the company faces. Based on its own plans, QuantumScape is more than two years away from commercial battery production. The company still needs to improve the separator it plans to use in batteries and increase the number of layers in its cells from 10 to over a hundred. Once the technology is developed, QuantumScape will need to ramp up manufacturing to produce cells in a viable way. In short, it faces significant risks. The company’s technology may not develop as it hopes or may not be commercially viable.
QuantumScape has set technical milestones and says it is progressing according to its plans. The company recently collaborated with Fluency Energy (NASDAQ: FLNC) to supply its solid-state batteries for use in Fluence’s stationary energy storage products. As part of the initial collaboration, QuantumScape will provide battery samples to Fluence for testing and validation. After successful testing, the companies expect to enter into a large-scale supply agreement. Essentially, QuantumScape will have Fluence as a ready buyer once it begins commercial production of its batteries.
Overall, QuantumScape stock is an intriguing bet with the potential to generate exceptional returns for patient investors with a strong appetite for risk.
Fuel Cell Electric Truck Manufacturer Stock Hyzon Motors (NASDAQ: HYZN) is trading near its all-time low. Several factors affect the stock. For starters, the limited adoption of fuel cell electric vehicles (FCEVs) compared to battery electric vehicles (BEVs) so far could, in turn, further impede the growth of FCEVs. This is because the more limited the refueling infrastructure, the more restricted FCEV growth will be, and vice versa.
Beyond the broader issue of FCEV adoption, Hyzon Motors stock is also affected by some company-specific factors. Hyzon has been targeted by short seller Blue Orca Capital for misleading its investors. Although the company responded to all of the short seller’s allegations, investors were not entirely convinced. Additionally, the Securities and Exchange Commission (SEC) is currently investigating the short seller’s allegations.
Despite ongoing issues, Hyzon managed to deliver 87 trucks in 2021, two more than its forecast of 85 trucks. Hyzon expects to generate lower-than-expected revenue for the year “due to product mix and multi-year revenue recognition for the majority of sales.” These factors are not necessarily a concern, and the successful delivery of the trucks is a key achievement for Hyzon.
The stock price is expected to rise if Hyzon can continue deliveries according to its plan and Blue Orca’s allegations are not proven to be true. Obviously, these are big risks to watch out for.
Fisker (NYSE: FSR) is another interesting EV stock that has fallen around 24% in January at the time of writing. The stock is still up around 24% from its 52-week low price. Fisker was founded by Henrik Fisker, known for his designs at Aston Martin, BMW, and Ford Motor Company. Fisker also founded Fisker Automotive, which went bankrupt in 2014.
By outsourcing manufacturing to an experienced parts supplier, Magna International (NYSE: MGA), and in partnership with CATL for its battery supply, Fisker appears to be ensuring that none of the past mistakes are repeated in its new venture. Magna International holds a 6% stake in the company. Fisker has also partnered with foxcon produce cheaper models from the first quarter of 2024.
Fisker already has 23,500 reservations for the Sport, Ultra and Extreme versions of the Fisker Ocean. The company is on track to start production of the Fisker Ocean in November this year.
With manufacturing outsourced to Magna, Fisker’s cars aren’t expected to encounter as many technical difficulties in real-world operations as other startup EV makers. However, it remains to be seen if the company will succeed in delivering cars with more features and at a lower price than the competition.
There seems to be a lot of interest in Fisker cars, as evidenced by the growing number of reservations. If the company’s cars do well, Fisker’s shares should rise significantly from their current levels. In the long term, Fisker’s success depends on its ability to deliver cars profitably at scale.
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Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool owns and recommends Tesla and Volkswagen AG. The Motley Fool recommends BMW and Magna Int’l. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.