They’ve been in the headlines over the past few months, and for a number of reasons. The SPAC, or special acquisition company, is exactly what the name suggests: a company formed specifically to make an acquisition. Essentially, a PSPC is a shell company, full of funds, that is formed to seek out a merger target. The target company is usually a small and mid-cap player who wants to go public, but lacks cash. PSPC provides the money.
Wall Street analysts don’t just comment on the trend; they also review new tickers entering the market and publish their ratings. Turning to the TipRanks Database, we pulled the latest data on three of these stocks that some analysts have called potentially strong investments. Not to mention that substantial upside potential is on the table. We’re talking about returns of at least 50% over the next 12 months.
NextGen II acquisition (NGCA)
We’ll start with NextGen Acquisition II, a SPAC company that should get a lot of attention. The company plans to merge with Virgin Orbit, the space travel company of British billionaire Richard Branson.
NGCA entered the commercial markets in March of this year, raising $ 350 million when it went public. In August, rumors became official that NGCA would merge with Virgin Orbit, creating a joint entity worth $ 3.7 billion. That total will include $ 483 million in new capital that NGCA will bring to Virgin Orbit and create a new ticker, VORB, for the space launch company.
Virgin Orbit is part of the Branson Virgin group of companies. The company is focused on inserting small satellites – cubesats that use small, standard-size technology to keep prices low – into Earth’s orbit. Cubesats are carried by Virgin Orbit’s LauncherOne vehicle, which in turn is launched from a modified Boeing 747 named Cosmic Girl. The company successfully conducted the first LauncherOne satellite deployment in January of this year.
This impending SPAC, which is expected to close by the end of 2021, has caught the attention of Benchmark Josh sullivan. Sullivan views Virgin Orbit’s unique launch system as a focal point for investors.
âThe key differentiator for VO is an extreme level of launch flexibility in timing and geographic location, all at a lower cost. VO can turn any 747-ready runway into a launch pad in a very short time. Traditional launch services rely on a fixed launch infrastructure that is subject to delays and vulnerable to military action. Additionally, when launching from a 747-400 at 35,000 feet, VO performed approximately 30% mission before the rocket is even launched, âSullivan noted.
The analyst summed up: âWe believe that VO is well placed to consolidate the new space race. With peak cost dynamics for specialized launch orbits, VO has a key advantage for the greatest barrier to accessing LEO space. “
The analyst is bullish on the outlook here and rates NGCA a buy. Its price target of $ 16 implies a potential one-year upside of 58%. (To look at Sullivan’s track record, Click here)
PSPCs don’t always get much analyst attention – they tend to go unnoticed. Sullivan’s is the only registered review for this stock, which is currently priced at $ 10.1. (See NGCA share analysis on TipRanks)
Decarbonization Plus Acquisition II (DCRN)
Carbon pollution is a priority nowadays and is implicated in the problems of climate change. The energy industry and electric utilities know where the wind is blowing and stand to gain from embracing emission reductions and switching to cleaner technologies. And that’s where DCRN and Tritium come in.
Decarbonization Plus Acquisition is a SPAC, formed for the purpose of merging with a clean technology company. The company aims to merge with Tritium, a developer of direct current fast charging (DCFC) technology, a technology vital to the expanding electric vehicle (EV) market. Tritium’s product line includes a line of DC fast-charging stations, suitable for a variety of uses, from commercial rental fleets to heavy-duty commercial vehicles. The company even markets charging stations in retail outlets, reaching out to customers who will want to charge their vehicles while shopping.
DCRN filed its proposed merger with Tritium at the end of last month. PSPC is bringing a market capitalization of just over $ 500 million to the merger, which will create a combined entity with an estimated market value of $ 1.4 billion. The merged entity will be listed on the NASDAQ, with the ticker symbol DCFC.
Among the bulls is Roth Capital’s 5-star analyst Craig irwin, which credits DCRN with a purchase and gives it a target price of $ 18. This figure reflects his conviction of an increase of around 80% for next year. (To look at Irwin’s background, Click here)
Supporting its position, Irwin notes the strong prospects for Tritium going forward, as a potential leader in the charging market: âTritium is one of the largest suppliers of direct current fast charging (DCFC) equipment for the electric vehicle (EV) markets, with a line for recharging consumers, the fleet and the depot. Management estimates a 15% market share in North America, with 20% in Europe, and attributes its strength to a 37% lower cost of ownership compared to its peers due to its liquid-cooled systems. We believe the company’s leadership position in DCFC hardware positions it for impressive growthâ¦ â
Irwin isn’t the only one who noticed this PSPC along the way. There are 4 analyst reviews on file for DCRN and they all agree that this is a buy stock, supporting the strong buy consensus rating. The shares are priced at $ 10.02 and the average target is $ 16, up about 60% year on year. (See the analysis of DCRN shares on TipRanks)
Acquisition of European sustainable growth (SGUE)
We will end with European Sustainable Growth Acquisition, an after-sales service that entered the markets in January of this year. The company has a current market capitalization of $ 181 million and is looking to merge with ADS-TEC Energy GmbH, a direct current fast charging company in the European market. The two companies formalized their plans last October.
ADS-TEC Energy has, in recent weeks, started to expand its footprint and market share, with an agreement to enter the Florida charging market through the sale of 20 fast charging units to Smart City Capital in the United States. part of a transition plan to Miami. the county of Dade as a leader in renewable energies. The company also plans to expand in Spain through an agreement with Wenea. Wenea is currently building Spain’s largest network of EV charging stations.
The upcoming business combination will create a common entity called ADS-TEC Energy. The new company will have a pro forma market value of approximately $ 580 million, with an additional $ 156 million coming from a PIPE investment guaranteed by the EUSG. The new ticker, ADSE, will remain on the NASDAQ.
We’ll check again with Craig Irwin of Roth Capital, who writes, âWe would be buyers for a one-stop storage and fast charge solution that solves an infrastructure problem that many have missed … We see the most compelling attribute ads-tec products like the ability to boost local DC fast charging capabilities for areas where the grid has insufficient power, taking advantage of the use of an integrated battery system and galvanic isolation of the charging system, so that low-speed battery charging can continue even when chargers are in use. “
All of the above prompted Irwin to evaluate EUSE a purchase with a target price of $ 18. This target reflects his confidence in EUSE’s ability to climb by around 80% from current levels. (See the analysis of EUSG shares on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the analysts presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.