CNBC’s Jim Cramer on Monday identified a handful of SPAC games that investors could buy if their stocks fell after a hot end of 2020 run.
“The SPAC games for electric vehicles were incredibly overheated at the end of last year. So if you see them cool like today, that’s actually a sign of health,” said the host of “Mad Money”.
On the first day of trading in 2021, the key averages had to fall sharply and only a few market areas were spared. This includes companies tied to an electrified automotive future whose stocks have gone through a brutal session after trading as part of one of the hottest groups on Wall Street in 2020. Many of these stocks saw double-digit falls, compared to a 1.48% decline in the year of the S&P 500.
SPACs, or special purpose vehicles, are publicly traded companies that sell stocks to raise money to fund the purchase of a private company. Before the SPAC makes an acquisition, its stock is typically sold for $ 10 per share.
Their shares are all up at least 20% from that level, with many of them doubling, Cramer said.
“So you have to be disciplined and take profits when you have them. That way, you can treat big sales as buying opportunities,” he said.
Below are his insights into six SPAC stocks:
QuantumScape, an electric car battery developer, began trading in August. Between late October and late December, the stock increased tenfold, closing a few days before Christmas at a high of $ 131.67.
The stock has since coughed up most of those gains to close below $ 50 per share on Monday, a 62% reversal from its December closing high.
“So I told you to be disciplined and call the register at $ 76. It’s now at $ 51. I think the stock is worth buying in weakness, but you can afford to be patient here.” It’s still worth more than $ 18 billion even though you don’t have one. ” meaningful sales, let alone profits. “
The stake in Switchback Energy Acquisition, which is merging with the charging infrastructure company for electric vehicles ChargePoint, suffered its fifth day off in seven trading sessions. The stock rose 363% from early July through mid-December, but fell 20% in just over a week to $ 36.78 at Monday’s close of $ 46.10.
“Even after down 8% today, I think it has to go back to the mid-20s before it gets interesting,” said Cramer.
The stock of Luminar Technologies, which makes lidar sensors for autonomous propulsion systems, rose to $ 41.80 in early December, a great return for investors who bought in at their low near $ 10 in late October. The stock gave up a quarter of those gains in a month, closing at $ 31.34 on Monday.
It is similar with Canoo, the manufacturer of electric vehicles, which wants to reinvent the manufacturing process. Canoo stock closed at a high of $ 22 in December and doubled in a month. The stock has since fallen double digits, closing at $ 12.30 on Monday.
“I think you should take Luminar deeper – a lot of insiders may be ringing the doorbell here – but I’d be a buyer of Canoo down here for $ 12,” Cramer said.
Arrival is a British manufacturer of electric vehicles and buses using micro-factories. The company is an acquisition target for Ciig Merger, a SPAC with a stock trade of $ 26.61. The share price has fallen from a closing high of $ 36.23 in early December, which was up 267% from July.
“I’d buy more if it got to $ 20 and sell more if it got down to $ 30,” Cramer said.
XL Fleet, a company that makes hybrid electric drives for trucks, saw the market grow 225% between late October and late December. Since then, the stock has fallen 38% to $ 20.07 as of the end of Monday.
“You had to buy it in weakness and sell it in strength. If it comes down a little bit more … you have my blessings to buy a little,” Cramer said.