XL Fleet EV inventory could possibly be a discount after a clean examine merger

CNBC’s Jim Cramer on Friday gave his assessment of XL Fleet, the electrification provider for commercial and municipal fleets, which is expected to go public next week via a blank check merger.

XL Fleet was founded in 2009 to open up the emerging economy for electric vehicles. The goal is a special purpose vehicle (SPAC) called Pivotal Investment, whose shares are undervalued, according to Cramer.

The stock was down 0.3% on Friday to close at $ 15.32 per share.

“Since Pivotal Investment is trading at $ 15 in the merger of the XL fleet, I think the stock could be a bargain,” said the Mad Money host. “But when it starts flying next week, please don’t try to chase it past $ 20.”

XL Fleet, which makes hybrid and plug-in hybrid powertrains, is the latest in a number of new entrants on SPACs, one of the hottest topics on Wall Street. SPACs were created specifically to raise funds, buy private companies, and go public.

The powertrains manufactured by the company are used to convert conventional gas-powered vehicles into hybrids on the assembly line. Their products are currently used in some Ford, GM and Isuzu fleet trucks.

The plug-in products that XL Fleet supplies for the Ford F-150 reduce CO2 emissions by 33%, according to the company.

XL Fleet plans an all-electric system by 2022. It’s going public in a year that sees a flurry of companies going public via SPAC deals, especially electric vehicle makers and related companies. The company is projected to generate revenue of $ 21 million this year, which is projected to increase to $ 647 million by 2023.

“What really sets XL Fleet apart, however, is that unlike most SPAC electric games, their products are already on the road,” said Cramer. “XL Fleet is a little different in that their short-term projections are much larger than what you can see from most of these SPAC names.”

Cramer is concerned about two headwinds the XL fleet is facing. This includes automakers planning to make their own all-electric models, which would reduce the need for XL Fleet powertrains. Ford has its own plans to launch electric models of the F-150 and Transit Van in 2022.

Cahs-stricken states and local governments are another headwind for the XL fleet, said Cramer, who fears the coronavirus pandemic could hurt spending on green transportation initiatives.

Meanwhile, the host believes the stock of Pivotal Investments, the acquiring company, offers a buying opportunity.

“I have to tell you, if XL Fleet is anywhere near its 2022 or 2023 projections, and we get clarity on this relationship with Ford and the F-150, this stock is cheap, damn cheap,” Cramer said. “XL Fleet would only trade 3.3 times its forecast for 2023.”

Disclosure: Cramer’s charitable foundation owns shares in Ford.

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