In recent times, SPACs have risen as a great investment option. Nowadays, what private companies do is enter the stock exchanges through acquisition at the hands of a SPAC, rather than an initial public offering. The market has been so crazy recently and that’s where SPACs have entered into the game.
If you’re unaware of SPACs, these are special-purpose acquisition companies. SPACs are restricted to make their IPO with an existing company through a merger or acquisition. According to SPAC Research, public offerings through special-purpose companies raised more than $83 billion in 2020. By June 2021, SPAC-facilitated IPOs have already raised more than $108 billion through the debut of close to 350 new companies on the stock market.
SPACs are new and tend to be risky investments. Therefore, they’re generally not appropriate for conservative investors. However, if you have an eye for upside and a healthy risk appetite, here are five of the best SPAC stocks to buy now.
The first stock in the list of the best SPAC stocks is DKNG. DraftKings (DKNG), the Boston-based sports betting company, went public as a SPAC in mid-2019. So far, DKNG stock has been impressive. The fundamentals look strong and DraftKings is in a good position to buy.
It has performed well in the recent quarters and is advancing into new areas, such as media and NFTs. The expansion opportunities will help the company to enlarge its customer base, and generate additional revenues via cross-selling to the existing players.
In the second quarter of 2021, DraftKings recorded $298 million in revenues. That’s a 320% jump in revenue over the same period in 2020. The increase in revenue is driven by the continuous growth of new customers. DKNG grew Monthly Unique Payers by 281% and Average Revenue Per Monthly Unique Payer by 26% in Q2. Based on the past quarterly outcomes, DraftKings has raised its revenue outlook for 2021.
DraftKings’ growth has helped the company to improve its working capital and cash. The trailing 12-months working capital has jumped to $197.40 million from $102.55 million in 2020 and just 31.94 million in 2019. Whereas, the cash and equivalents by the year-end 2020 were $1,817.26 million, a staggering increase from $76.53 million in 2019.
DKNG stock looks solid and has covered all the fundamentals in the right manner. The stock is trading closer to the major support region for the last 52-weeks. The RSI is 41.72 that indicates a good buy position.
ChargePoint Holdings (CHPT) has one of the largest EV charging station networks in North America and Europe. CHPT had more than 118,000 activated ports as of July 2021. ChargePoint is a reasonably big company and it will get bigger with the expansion of its business. Institutions hold a large portion of the company, almost around 73.20%.
If we examine the earnings report, ChargePoint’s improving quarterly outcomes have resulted in continued growth and leadership in the electric revolution. The company has achieved record revenues and significantly grew its commercial, fleet, and residential businesses. ChargePoint has launched a charging integration with Mercedes, which is a good indicator for long-term growth.
ChargePoint has agreed to acquire a European e-mobility technology provider has·to·be, and acquired eBus and commercial vehicle management provider ViriCiti. That means that CHPT is really digging deep into the sector and wants a stronghold in the coming years.
To no surprise, the financial outcomes have been impressive as well. For the second quarter, revenue was $56.1 million, an increase of 61% from $35 million in the prior year’s same quarter.
The stock has been up and down this year. That’s due to Wall Street’s inability to decide on a single narrative on CHPT stock. However, it’s in a good buying zone with an average price target of $33.33. Stifel has recently initiated a buy rating with a $29 price target.
Opendoor Technologies (OPEN) is an online company for transacting in residential real estate. It’s the new way you sell your house.
The recent happenings can make OPEN a very good stock to bet on. Opendoor’s major competitor Zillow has backed down from taking on additional contracts to purchase homes at this time. That’s due to Zillow’s inability to fulfill its operational capacity. You would be wondering, what does this have to do with OPEN stock?
Well, it’s pretty simple. Opendoor may benefit from Zillow’s stumble. It has low costs of capital. Still, the firm has plenty of work ahead. The company benefits from the strong progress of its offerings. In recent times, it has benefited from rapid adoption and gap in the market.
Moreover, Opendoor has highlighted that for every two homes they sell, they’re registering one customer saying yes to Buy with Opendoor, which is part of its flywheel. That’s great to see from OPEN’s viewpoint.
Opendoor during the second quarter of 2021, posted a 59% higher revenue with improvement in gross profit and net income as well. The company sold 41% more homes from the previous quarter. To sustain this, the company will need higher profitability as it expands in more markets. In Q2, Opendoor expanded to 39 markets and entered 12 new markets. That is a good sign as we head forward.
Citigroup has a buy rating for OPEN stock with a price target between $34 and $40. The stock is in a good position to buy before it touches its next major resistance point.
UWM Holdings Corporation
One of the major SPAC stocks is UWMC. UWM Holdings (UWMC) is the parent company of the U.S.’s No. 1 Mortgage firm, United Wholesale Mortgage. It partners with independent mortgage brokers to help them provide unparalleled client experience and best-in-class turn times.
UWMC Stock has suffered in 2021, which is kind of good for investors. That’s where you enter the market when the stock is trading on the lower side. UWM is trading around its 52-week lows, which puts it in a massive upside position. But which factors can be vital in the recovery of UWMC stock?
It is the leading wholesale mortgage lender in the country. The company mainly serves as the middleman for a vast network of mortgage brokers that spans all 50 states. For the investors, the value comes from UWM’s recurring revenue streams. That stems from having mortgage servicing rights on any lending it lends a hand with. That makes UWMC one of the few profitable SPACs, with attractive growth and income play on the hot U.S. housing market.
The company has plans to accept cryptocurrency for mortgage payments. UWM Holdings is yet to decide the crypto coins, though they expect to settle crypto payments integration by the end of 2021. If UWM makes the headline with crypto news any time soon, the stock can boom as it sits at the bottom.
Analyst firm UBS has initiated the buy rating with an $8.50 price target. Whereas, Morgan Stanley has given UWMC an equal weight with an $8 price target.
Sports Entertainment Acquisition Corp.
Sports Entertainment Acquisition (SEAH) is one of the new emerging SPACs in the sports industry. It concentrates on mergers with companies working in the sports and entertainment sectors. The key objective of SEAH is to focus on the technology and services sub-sectors.
Sports Entertainment has a definitive agreement for a merger with Super Group, an online sports betting and gaming company. SEAH stock price highly depends upon what’s happening around Super Group.
The sports sector has continued to evolve over the years. The digital marketing and ads industry boom has created opportunities for firms like Sports Entertainment.
Super Group operates in the market with the brand name of Betway. Betway has now become a global brand and is expanding across Europe and different parts of the U.S. Recently, Super Group announced its new market expansion in the U.S. and Europe. The company will go live with Betway in the Lowa state of the U.S. as well as a new license in Poland.
Super Group has more plans for the next year and this expansion will certainly pump SEAH stock in the coming months. The stock is not explored yet and you can jump into it before it’s too late.
SPACs can be a risky investment as they work on the mechanism of mergers and acquisitions. That can end either way. Therefore, you should do your due diligence before investing in SPAC stocks.