As companies in the electrical vehicle sector go, Hyliion Holdings Corp. (NYSE:HYLN) is something of an outlier on 18 wheels. Unlike the many outfits that build cars, vans and SUVs from scratch, Hyliion takes diesel trucks and transforms them into hybrids or EVs. That makes HYLN stock one of the few investments that combines trucking and eco-friendliness.
The company also comes along at an ideal time as part of larger trend. ESG investing — that is, buying stock based on how companies score on environmental, social and governance measures — is exploding. Milton Friedman and Gordan Gekko be damned, total ESG investing now surpasses $17 trillion, a 42% increase since 2018.
In other words, today’s smart investors know that ”E” investments can save the planet even as they make money and rack up robust returns. If HYLN stock answers the call of the former, does it satisfy the conditions on the latter?
HYLN Stock and Behind-the-Scenes Movement
Zooming in on this EV endeavor from 10,000 feet, Hyliion Holdings has shown some corporate muscle flex of late. On Jan. 20, it named Bobby Cherian as senior vice president of sales and supply chain, bringing in an industry vet with three decades of commercial trucking and transportation experience. Meanwhile, Sherri Baker takes the reins as CFO on Feb. 8.
All of this signals a healthy shifting of gears. In June, Hyllion emerged as a publicly traded company via a reverse merger with Tortoise Acquisition Corp. Tortoise was a special purpose acquisition company (SPAC) created with sole purpose of funding a publicly-traded Hyllion.
As anyone following the EV sector knows, SPACs are the rage these days. Lordstown Motors (NASDAQ:RIDE) and Fisker Inc. (NYSE:FSR) number among the companies that emerged in 2020 from SAPC activity. That puts HYLN stock in good company, as SPACs tend to provide nice tailwinds once the reverse mergers complete.
Money in the Motor
The Hyllion-Tortoise transaction put $560 million into the new company’s account and since bowing on the Big Board, HYLN stock is up 70%. Yes, it’s fallen two-thirds since its early September peak. But here you’ll notice a very high correlation with the drop of disgraced EV maker Nikola Corp. (NASDAQ:NKLA).
Looks to me, in this case, like Nikola investors caught a cold and Hyllion investors wound up with the flu. To me, the market reaction was extreme and irrational. Scooping up HYLN stock right now looks like buying the bottom to me.
Do Wall Street analysts agree? Sort of. Only three cover the company, which is three more than just a month ago. One rates it a buy, two a hold. Technically, this rates the company as overweight. But it’s not exactly a runaway truck as enthusiasm goes.
Roll With It, Baby
I interpret this in two ways. First, attaching gizmos to the axles of Class 8 trucks isn’t nearly as glamorous as making sexy, sporty automobiles with vegan-friendly seats (something Fisker is working towards with its Ocean SUV).
Second, HYLN stock simply flies below the radar at this point. The company focuses on the stuff of industrial park trucking bays rather than gleaming suburban showrooms. That lack of public visibility doesn’t translate into headlines or one-on-one beach strolls where reporters lob softball questions at barefoot rock star CEOs.
Thus between the cash in its coffers, the specialized niche it occupies and the low share price point driven in large part by another company’s shenanigans, Hyllion sits pretty. And HYLN stock screams buy. This may also work out well for investors in the short term, since Hyllion’s technology allows for on-the-spot retrofitting of trucks already on the road.
So what do you say? Let’s climb in the cab, blast the horn to wake up neighbors and pull up to the onramp. Looks like it’s gonna be one fun-and-profit road trip.
On the date of publication, Lou Carlozo did not have (either directly or indirectly) any positions in the securities mentioned in this article.