After being all the rage in 2020 and early this year, growth stocks, especially initial public offerings and Special Purpose Acquisition Companies (SPACs), have fallen out of favor. It is not totally without merit; after all, the number of PSPC is greater than quadruple in 2020 compared to 2019, and the number of IPOs has more than doubled. Not only that, but 2021 also already has overwhelmed The frenzy of 2020, and it’s only May.
Such activity is linked to a lot of speculation, bad actors and below average companies. But that doesn’t mean that all IPOs and PSPCs are bad companies, if not too expensive. In fact, some PSPCs have brought some really interesting companies to market. Sure, investing in a start-up is risky, but if a company with cutting edge technology takes over the rewards can be immense.
This is why investors should get to know Expulsion (NYSE: OUST), Office metal (NYSE: DM), and Romeo Power (NYSE: RMO), which have the potential to transform the LiDAR, 3D printing and electric vehicle industries – industries that are themselves destined for searing growth.
Ouster’s digital LiDAR revolves around analog, at a fraction of the cost
LiDAR Ouster was founded in 2015 by two engineering graduates from Stanford, inventing Ouster’s digital LiDAR concept that year. LiDAR uses lasers to enable range, not only in self-driving cars, but also in automated industrial applications, drones, and smart infrastructure.
As semiconductor chips have become more advanced, digital LiDARs are shaking up old analog models, lowering costs, increasing capacity, and opening up entire markets. Think about cameras – they used to be big, bulky and expensive tools, but thanks to the digital revolution, everyone now has an advanced camera that fits into a smartphone. While many associate LiDAR with self-driving cars, its potential uses are much broader. In fact, there are many more profit opportunities for LiDAR in the industrial, smart infrastructure and robotics industries, according to Ouster.
While not without competition, Ouster seems to have a ‘special sauce’. It has 29 patents and over 100 pending worldwide on its digital architecture and proprietary chipset. In addition, the company has developed its offerings with a unique common architecture, which can be endlessly customized through software-defined changes. This simple, software-defined architecture is very appealing to developers, and is reminiscent of the approach NVIDIA taken with its CUDA platform for its GPUs – and we all know how well that turned out.
While PSPC’s presentation projections should always be taken with a grain of salt, Ouster projects nearly $ 1.6 billion in revenue and around $ 564 million in operating income by 2025, but its capitalization Stock market, down 40% from recent highs amid PSPC’s liquidation, is only about $ 1.9 billion today.
The revenue won’t really materialize for a few years, and the company is only forecasting $ 33 million in revenue this year. Still, Ouster is adding customers at a rapid rate, with more than 500 today in some sort of trial and more than 40 strategic customer agreements, for a total of $ 385 million contracted through 2025 – and those offers are growing. each quarter.
If Ouster delivers on its promise and LiDAR is widely adopted for a wide range of applications outside of automobiles over the next decade, its stock is a very good deal.
Desktop Metal finally seeks to deliver on the original promise of 3D printing
Nearly ten years ago, 3D printing stocks were all the rage on Wall Street. Many believed that 3D printing would revolutionize traditional manufacturing, ushering in a new era of cost-effective, highly customizable manufacturing capabilities across a range of industries.
As many now know, that didn’t happen, and many early players have seen their stocks tumble from great heights. 3D printing has proven to be a useful tool for prototyping, design, and tooling, but in terms of replacing traditional manufacturing, the technology fell short.
That is, so far – at least according to Desktop Metal, which went public via SPAC in December. Desktop believes it has cracked the code for 3D printing for mass production, which will usher in what it calls “additive manufacturing 2.0”. 3D printing consulting firm Wohlers report says additive manufacturing could grow from a $ 12 billion industry today to a $ 146 billion industry by 2030, as it is embraced by manufacturers final.
Desktop Metal estimates that its single-pass jet technology can deliver 10 to 100 times the throughput of traditional binder jet solutions and over 100 times the performance of traditional powder-based melting technology. Beyond metal applications, Desktop Metal has also added this year to its arsenal of tools. The company acquired the best EnvisionTEC elastomeric 3D printer in February. Like Desktop Metal, Envision promises more than 100 times the speed of existing solutions for 190 different types of polymers. Desktop Metal consolidated its plastics offering with the acquisition in early May of Adaptive 3D, which the company claims makes the highest quality elastomers in the world. Since many large manufacturers likely need both metal and plastic parts, the potential for cross-selling could be considerable.
But Desktop Metal is also innovating internally, recently unveiling a new printer called Forust, which can 3D print wood parts from cellulose and sawdust, providing a sustainable manufacturing solution in a finished wood products market. $ 1.3 trillion.
Like Ouster, Desktop Metal is generating minimal revenue today, with just $ 11.3 million in the first quarter. However, that’s likely because the company’s signature additive manufacturing product, the P-50, won’t begin commercial shipments until the second half of this year. As the P-50 is deployed and there are more contributions from new acquisitions and new products, revenue is expected to reach an annualized rate of $ 160 million by the end of this year. .
Desktop Metal may not look particularly cheap today, with a current market cap of $ 3.37 billion; however, this figure is down 62% from all-time highs recorded in February. Management expects double-digit market share from this large future 3D printing market. If this happens, an investment in Desktop Metal could pay dividends over the next decade.
Romeo Power’s battery packs power the next generation of heavy-duty trucks
While much attention has been paid to the barrage of EV companies going public through SPAC, one EV-related company has escaped the radar of many investors: Romeo Power.
Unlike most other PSPCs related to electric vehicles, Romeo does not produce an entire vehicle or powertrain. Rather, it focuses on the most important component of electric vehicles: the battery. With the best engineers like You’re here, SpaceX and other high-tech companies, Romeo has battery technology with the highest gravity density in the industry. This means that its configurable battery technology offers the best value for money, which is of great importance to Romeo’s target customers: heavy truck manufacturers. Most truck manufacturers and fleet owners are committed to electrifying their fleets over the next decade, so Romeo’s opportunity is significant.
So why did Romeo Power’s stock fall 80% from its December highs, shortly after its IPO via a SPAC? Address a shortage of battery cells in the industry. Romeo manufactures its cell packs from third-party vendors, and given the widely known shortage of semiconductors and the overwhelming demand for electric vehicles, there is currently a great shortage of high-quality cells. This forced Romeo to lower his 2021 revenue targets from $ 140 million at the time of his PSPC to just $ 18 million to $ 40 million.
Yet the current shortage has nothing to do with the company’s technology or longer-term opportunities. Meanwhile, Romeo recently signed a long-term drum deal with Paccar, to supply batteries for its 579EV and Peterbilt 520EV garbage truck models. These two models alone account for 10% of the global Class 8 truck market. This deal is a big deal, and CEO Lionel Selwood Jr. said he was “very confident” the company will announce further deals. long-term production this year.
With a market cap of just $ 1 billion, below the SPAC price, and a reserve of $ 287.5 million, Romeo certainly looks like a cheap stock if it can deliver on its tech promise and translate those deals to long term in revenues and profits.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.