3 SPAC Stocks Investors Can Buy In Q2 of 2022
08 April 2022 - 12:29PM
Finscreener.org
SPACs or special purpose
acquisition companies were among the trendiest investment vehicles
in the last two years. Basically, SPACs are public entities created
to merge with private companies in order to take them public. It is
considered an alternative to a traditional initial public offering
or IPO. In 2019, there were just 59 SPAC IPOs. This figure
increased to 248 in 2020 and 613 in 2021.
However, an economic trend
witnessed in the last six months led to a sell-off of high-growth
and speculative stocks dragging SPAC prices lower. Let’s take a
look at three SPAC stocks attractive to contrarian and growth
investors.
Lucid Group
Down 61% from all-time
highs, Lucid Group (NASDAQ:
LCID) is currently valued at a market cap of $37
billion. Shares of the electric vehicle company plunged lower after
its production guidance for 2022 failed to impress investors. Lucid
initially stated it will deliver 20,000 units in 2022 but its
forecast has been lowered to between 12,000 and 14,000
units.
Similar to most other
manufacturing companies, Lucid has been impacted by supply chain
disruptions. It seems Lucid is fighting an uphill battle to expand
manufacturing capabilities in an environment where components are
hard to find.
Companies such as Lucid will find
it difficult to navigate the current uncertainties as they will
have to switch suppliers, pay a higher cost for components, and
order excess inventory, increasing operating costs over
time.
However, Lucid remains a top bet
for long-term investors given its technology, demand for products,
sizeable manufacturing capacity, and robust cash
balance.
Analysts tracking LCID stock
expect sales to increase from just $27 million in 2021 to $3.43
billion in 2023, which means itU+02019s valued at a forward price
to 2023 sales multiple of 11x. Lucid Group is trading at a discount
of 50% to average analyst estimates.
SoFi Technologies
A pioneer in the student loan
refinancing vertical, SoFi (NASDAQ:
SOFI) has successfully expanded its suite of products
and services to manage all kinds of loans on its mobile
application. You can access mortgage loans, buy stocks with
tax-advantaged retirement accounts, open a checking account as well
as hold a SoFi credit card with a single app.
In 2020, the fintech company
spent $1.2 billion and acquired Galileo Financials, a digital
payment platform with savings and checking account functionalities,
which is likely to complement existing offerings.
SoFi recently received approval
to become a national bank enabling it to finance loans with user
deposits and lower cost of capital. SoFi
ended 2021 with $1 billion in sales and its top line is
estimated to grow by 44.6% to $1.45 billion in 2022 and by 42.2% to
$2.06 billion in 2023.
Given its market cap of $6.5
billion, SOFI stock is valued at an attractive price to 2022 sales
ratio of 4x.
Hims & Hers Health
The final SPAC stock on my list
is Hims & Hers Health (NYSE:
HIMS) which is
down 80% from all-time highs, valuing the company at $1.02 billion,
by market cap. HIMS is a telehealth entity that offers low-cost
online medical consultation where patients can text, call, or video
chat with healthcare professionals. It also operates a
consumer-facing brand by selling products and supplements which is
available online and in other retailers in the U.S.
Hims and Hers increased recurring
subscriptions from 157,000 in Q1 of 2019 to 609,000 in Q4 of 2021.
In the last three years, annual consultations were up 450% allowing
the company to increase sales at an annual rate of 117% in the last
three years. It ended 2021 with $272 million in sales with an
adjusted EBITDA of negative $30 million.
However, HIMS has a cash balance
of $250 million providing it with enough liquidity to
support its cash burn
rate. Further, its gross margin has almost tripled in the last
three years and was around 75% in 2021. So, HIMS is on-track to
turn profitable by the end of 2024 as margins are bound to move
higher on the back of revenue growth.
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