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Fisker Shares Could Begin Moving Higher as Production Ramps Next Year

Fisker (NYSE:FSR) announced its latest second-quarter results on Aug. 8 and indicated that it now has $962 million in cash as of June 30, 2021. In my…

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Fisker (NYSE:FSR) announced its latest second-quarter results on Aug. 8 and indicated that it now has $962 million in cash as of June 30, 2021. In my last article on FSR stock, I argued that Fisker would need to do a further capital raise. I felt that the luxury electric vehicle (EV) maker would run low on cash before it began production in the fall of 2022.

Source: T. Schneider / Shutterstock.com

But Fisker came through.  The company announced on Aug. 13 it closed a $625 million convertible note offering. Moreover, investors have the right to buy another $100 million in convertible notes. The amazing thing is that it did not hurt FSR stock as I originally thought it might.

So now I am much more positive about the stock going forward.

Moreover, the terms were not that onerous. The conversion feature is at $19.70 per share. That is now 39.5% over the Sept. 7 price of $14.12. In addition, the cost of the notes (unless converted into common stock) is only 2.50% annually, paid semi-annually.

Now I feel like the company will have enough cash to cover its ongoing costs at least through the point of initial production and shortly thereafter. This helps buttress the value of FSR stock going forward.

In addition, if they were able to raise this much cash in a convertible note more than a year before production, they could do so again if need be. That also helps support the value of the stock going forward.

What Fisker Stock Could Be Worth

In Fisker’s latest updated Sept. 2021 investor slide deck, the company says it expects to be able to produce 200,000 to 250,000 annual unit sales by 2025.

Moreover, on page 31 of the slide deck, Fisker indicates it was able to raise a total of $667.5 million in the convertible note offering. The company also indicates that there will be no dilution, due to some derivatives that the company bought, below $35 per share. And the dilution to existing shareholders will only be 2% at $40. This shows that there is a significant value left in the stock.

In addition, it also shows that the company now has $1.487 billion in cash. That means that the EV business is only being valued at $2.694 billion. That is probably too cheap.

One reason is that page 29 of its original presentation shows that Fisker expects to have $10.6 billion in sales by 2024. It also shows that free cash flow could be as high as $1 billion by then.

Assuming we use a 10% discount rate for 3.5 years in the future, the present value of that $1 billion is worth $716.35 million today. At a 10% FCF yield, that implies the business is worth $7.163 billion today. After adding back $1.487 billion in cash, the value of FSR stock is $8.65 billion. That suggests that FSR stock is worth 106% more than its market cap today of $4.181 billion. In other words, FSR stock has a value of $29.21 per share.

What to Do With FSR Stock

Assuming it takes two years for this to happen, this reasoning implies that FSR could rise 43.8% annually on a compound basis each year. If it takes three years, the stock could rise 27.4% each year on a compound basis.

In other words, expect to see FSR somewhere between $18 and $20.30 within 2 years or so. That suggests investors can expect to make a good return. Again, this assumes that the company is able to begin production and start producing free cash flow by 2024. Any delays in that timeline would lower the value of FSR stock.

As a result, the recent price around $14 looks like good value, especially now that the company has plenty of capital to get it through the first production next fall. Investors might want to begin taking a toehold stake, with a view to averaging down if necessary.

On the date of publication, Mark R. Hake did not hold a position, directly or indirectly, in any security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.

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Energy & Critical Metals

PLUG, FCEL, BE: What Is Going on With Fuel Cell Stocks Today?

Today, fuel cell stocks are in focus for investors. Shares of Plug Power (NASDAQ:PLUG), Bloom Energy (NYSE:BE) and FuelCell Energy (NASDAQ:FCEL), are all…

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Today, fuel cell stocks are in focus for investors. Shares of Plug Power (NASDAQ:PLUG), Bloom Energy (NYSE:BE) and FuelCell Energy (NASDAQ:FCEL), are all trading between 2% and 5% higher at the time of writing.

Source: Shutterstock

Indeed, this move today reverses what has been a rather bearish trend among fuel cell stocks in recent months. Once a hyped-up growth sector with burgeoning expectations, investors have largely shifted their capital to other high-growth sectors of late. Accordingly, those who have remained bullish on the green hydrogen space have largely been awaiting some catalysts to look at for hope.

Today, it appears a few catalysts are materializing for these fuel cell stocks. Let’s dive into what investors are looking at with these three big players today.

Key Catalysts Driving Fuel Cell Stocks Higher

Among the key catalysts investors are watching right now is sentiment across the sector. Various reports have pointed out that carmakers such as BMW (OTCMKTS:BMWYY) and Volkswagen (OTCMKTS:VWAGY) have engaged in plans to invest in hydrogen fuel cell infrastructure and prototypes. This speculation has driven investors to consider whether green hydrogen vehicles are really a possibility, given the strength the electric vehicle (EV) battery market has seen in terms of market share thus far.

In addition to this vote of confidence from big time automakers, Plug Power has announced plans to build the largest green hydrogen production facility on the West Coast. This facility will reportedly be able to handle 30 tons of LH2 per day. That’s a big boost for investors bullish on the ability of the green hydrogen sector to truly go national. Infrastructure continues to be the key hinderance to mass acceptance of this technology. Accordingly, this is a very important catalyst for the entire sector, should Plug Power follow through.

Accordingly, on the basis of these factors, analysts have become bullish on this sector’s potential. Today, a Piper Sandler analyst piped up about Plug Power’s prospects given its infrastructure investment and the potential for additional announcements during the company’s upcoming analyst day. These factors earned PLUG stock an upgrade. It appears its peers are following the lead PLUG stock took this morning with this news.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Eric Fry: Following This Week’s Market Wobble, Park Your Cash in The “Second Electric Revolution”

Last week, we learned that Chinese real estate giant/corporate conglomerate Evergrande (OTCMKTS:EGRNY) is severely lacking in liquidity and couldn’t…

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Last week, we learned that Chinese real estate giant/corporate conglomerate Evergrande (OTCMKTS:EGRNY) is severely lacking in liquidity and couldn’t make payments on its debts.

You don’t need me to tell you that the markets have been quick to react.

The U.S. markets began this week in the red… and are still down more than 2% from their recent peaks.

Could this be the #1 play in new $56 trillion industry?

However, I’ve been preparing you for just such a situation by focusing in on the “megatrends” that will lead us to the best and boldest profit opportunities for the rest of this year and next.

 

These are the kinds of trends and stocks that should, as I say below, “carry us out of this low”… and thrive over the months and years to come.

Namely…

  • The Second Electric Revolution space, which has gone from a fun “competition” to a foregone conclusion in recent years. Long-duration Vanadium batteries as a partial replacement for “not so green” lithium-ion batteries is one of my favorite stories within this megatrend.
  • The long beaten-down travel sector, which is experiencing a “darkness before the dawn.” And with the Covid-19 ban against European travelers being lifted in the U.S. earlier this week, the dawn may come sooner rather than later.
  • Lastly, cybersecurity is a major profit opportunity. And with 5G inching ever closer to global deployment, it’s only going to become bigger.

On Tuesday, Sept. 14, I sat down with InvestorPlace CEO Brian Hunt for a special members-only videocast for members of my elite trading service. We talked about each of these trends more in depth — including how they’ve played out for readers of The Speculator.

Because that conversation went so well — and because what we talked about directly connects to this week’s market moves, I’ve decided to share some of it here.

Check out a snippet of our conversation below…

Big Challenges, Big Opportunities

Brian Hunt: So, Eric, over the last 12 months or so, you’ve scored several handfuls of giant gains — 200%, 800%, 1,000% even — and no surprise to me, these gains have largely occurred in some of the megatrends you’ve been writing about over the past several years. So, I was wondering if we could start off talking about the status of these megatrends, how they played out in the last year, and where you see them going over the next few years.

Eric Fry: Sure, well, let’s extend the calendar a bit to the last 18 months. From the lows of the post-Covid-selloff, looking back at that period of time, in hindsight, it was a great time to invest in the stock market — in almost anything. The market tanked, and you had the opportunity to buy a lot of great stocks, but it was obviously a scary time to invest. You had to focus on what’s going to carry out of this low — no matter what. So, we’ve been focusing on trends like what I call the “Second Electric Revolution,” which is the whole transformation of global transportation and power generation network from oil-centric to electric. Electric vehicles, energy storage, and that entire supply chain that goes into those things.

 

That’s been a big focus for The Speculator, and a number of our big winners have been in that area, in some part of that supply chain. A lot of them have been in the battery metals area, things like the Freeport-McMoRan trade, which delivered over 1,000% gains. And then [our emerging copper play] has been a big winner, and more recently [my nickel-manganese trade] been a big winner… And I think we’re still early in that trade. So, that’s why I closed out the Freeport-McMoRan position that we established at the lows of March 2020, and then reestablished a new trade. Because I think we’ve had a correction in the copper market, and now we’re going to see that market take off again, and we’re going to see battery metals take off again. So that’s a great place to be, I think.

BH: You know, something you frequently point out that really makes the case — we’re really early on in this game, the “Second Electric Revolution.” So much of it is related to what’s going on in transportation, the switch from combustion engines to battery-powered vehicles is the, correct me if I’m wrong, the percentage of vehicles sold in the United States that are electric is still under 5%, right?

EF: That’s correct, yes.

BH: So as big as we think this thing is now, it’s still a relatively small part of the transportation industry.

EF: It’s a tiny market still, but it’s growing. The thing about this revolution is that, like many revolutions, people initially focus on the things that they can see. You know, like a Tesla. That’s the most obvious change. But I don’t even think two years ago that you or I would’ve guessed how electric bicycles would take off, or scooters would take off. So, they’re all over the place now. Every kid’s got an electric bicycle — and that’s not just in the United States. It’s a global phenomenon.

So that’s also incremental demand for things like copper, nickel, and lithium. It isn’t just electric vehicles; when you layer in technologies like energy storage, about which I am extremely bullish, and which I believe is going to surprise almost all experts on the upside because of its adoption, you now have one more layer of demand. So anywhere a company sits there in the supply chain, they should do pretty well.

 

Call Dibs on the Second Electric Revolution — Before Everyone Else Does

As I repeatedly said during Brian’s and my videocast – and as I repeatedly say here — all investors should keep their eyes on something “the Second Electric Revolution.”

This revolution is powering ahead… and it is creating spectacular opportunities everywhere it goes. But finding the best ways to invest in this revolution is no easy task.

Many leading companies in the electric vehicle (EV) and energy storage sector are losing money. The Chinese EV company Nio (NYSE:NIO) is one high-profile example, but it’s hardly alone.

According to calculations from FT Alphaville, a representative selection of 23 EV manufacturers, nine battery/cell producers and nine charging station businesses recently reached a staggering combined market value of $1.6 trillion.

Legendary analyst who called 2000s tech wreck: Do This!

Incredibly, only six of these 41 EV companies managed to generate a gross profit over the last 12 months. The other 35 were losers.

Therefore, rather than invest in money losers in the EV sector, I have recommended companies that provide essential ingredients to the EV and energy storage industries.

I’m talking about “battery metals.”

To capitalize on these prospective booms, I’ve recommended many battery metals plays, including Freeport-McMoRan (NYSE:FCX) here — up nearly 205% since I made it my entry in the InvestorPlace 10 Best Stocks for 2020 contest.

And I just added a new name to that list (learn how you can get details on this pick here).

So, stay tuned. As more megatrends emerge, you’ll be the first to know.

Regards,

Eric Fry

P.S. I took first place in Wall Street’s biggest investment competition, topping 650 investors. What $56 trillion opportunity is on my radar now? Click here to learn more.

NOTE: On the date of publication, Eric Fry did not own either directly or indirectly any positions in the securities mentioned in this article.

Eric Fry is an award-winning stock picker with numerous “10-bagger” calls — in good markets AND bad. How? By finding potent global megatrends… before they take off. In fact, Eric has recommended 41 different 1,000%+ stock market winners in his career. Plus, he beat 650 of the world’s most famous investors (including Bill Ackman and David Einhorn) in a contest. And today he’s revealing his next potential 1,000% winner for free, right here.

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Energy & Critical Metals

Eguana Technologies Enters Master Licensing Agreement With E-Gear

Eguana Technologies (TSXV: EGT) has reportedly entered into a master licensing agreement with that of E-Gear LLC, whom it has
The post Eguana Technologies…

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Eguana Technologies (TSXV: EGT) has reportedly entered into a master licensing agreement with that of E-Gear LLC, whom it has partnered with in Hawaii. The licensing pertains to certain software developed by E-Gear.

The arrangement will see the integration of energy asset management and aggregation technology developed by E-Gear into the residential energy storage solutions that have been developed by Eguana. The arrangement will see Eguana have the ability to further alter the tech developed by E-Gear to better suit its application.

“For Eguana, incorporating these capabilities into our residential and commercial storage solutions enables us to take direct control of the customer experience and create valuable virtual power plant assets. By optimizing the supply of power into the grid, we will create new and recurring revenue opportunities both for ourselves and our customers,” commented Justin Holland, CEO of Eguana, within the announcement.

While Eguana will have access to this tech, E-Gear will still retain the ability to develop and utilize the tech in its own product lines, while also remaining as the owner of the original source code. The tech is believed to pertain to advanced grid services, and how the energy storage solutions interacts with the grid.

Terms of the arrangement were not disclosed.

The arrangement follows the announcement in early July that Eguana has been selected to work with the state of Hawaii’s Public Utility Commission. The company has received a $3.6 million first order under a program with the commission, for which E-Gear’s tech is believed to be utilized.

Eguana Technologies last traded at $0.29 on the TSX Venture.


FULL DISCLOSURE: Eguana Technologies is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Eguana Technologies on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.

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