Workhorse Group (NASDAQ:WKHS) is showing investors what backing penny stocks can lead to—massive and sudden gains. Shares of the electric-powered vehicle maker have skyrocketed since early May, growing over 500% in value.
Now, there are potentially more gains ahead for WKHS stock, as a lucrative contract lies within reach.
Let’s check this out.
Workhorse Group Gains 500%
Workhorse Group produces electric-powered delivery and utility vehicles. Shares were trading sideways for most of one year, selling in and around the $0.80 mark. However, in May, General Motors (NYSE:GM) announced it was in discussions with the company to sell its Lordstown, Ohio, complex. From that news, shares have not looked back.
The reason for the company to purchase the complex comes down to a vehicle in development for a potentially massive contract—of which Workhorse is in the running. This speculative contract is playing a major part in WKHS stock’s recent movement.
USPS Contract
The contract in question is for 180,000 new vehicles for the United States Postal Service (USPS) to replace its iconic Grumman LLV truck. The trucks are to be delivered over five to seven years, and the business should generate roughly $6.3 billion for whatever company wins the contract.
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Workhorse Group’s venture with commercial truck specialist VT Hackney is one of the five finalists currently in contention for the contract, and it is for this reason that WKHS stock is spiking.
Investors have Faith
While still highly speculative, investors have faith because shipping juggernaut United Parcel Service (NYSE:UPS) recently ordered 950 electric delivery trucks from Workhorse. This helps Workhorse’s position in the bidding war.
Further, Workhorse Group is well cut out for the massive USPS contract. The company not only develops electric vehicles, but it also develops cloud-based, real-time telematics monitoring systems. This will offer USPS fleet efficiency while also optimizing energy consumption.
Of course, with shares reacting to what might be, those with less faith may want to buck and run here. Because if Workhorse Group doesn’t win the contract, you can bet that shares will crash. As with all penny stocks, be wary of entering into the deal.
WKHS stock is currently selling for $3.81 on the NASDAQ exchange.
Featured Image: DepositPhotos © IgorVetushko
