Several factors affect stock prices. Some of these, like macroeconomic and industry factors, are mainly out of a company's control. However, company-specific factors, which are a key driver of the stock price of any company, are largely under its management's control. When the market feels that a company is not on the right growth track, the sentiment gets reflected in its stock price.
The stock price may, however, rise again if the company's performance improves. So, a dip in price may present a great opportunity to buy stocks at bargain prices. Notably, not all stocks whose prices have fallen are buys.
Here are three companies that seem to have a fair chance of doing well in the future. If that happens, their stock prices could recover from their current levels, generating handsome returns for their investors.
Image source: Getty Images.
QuantumScape
Stock of solid-state battery technology company QuantumScape (QS -1.98%) is trading close to its all-time low price. QuantumScape's stock rose steeply after it went public in November 2020. The company is developing lithium-metal batteries that would be much more energy dense than the lithium-ion batteries commonly used right now. What's more, QuantumScape expects its batteries to also cost less than lithium-ion batteries. If successful, QuantumScape's batteries could significantly improve the range and performance of electric vehicles.
Volkswagen, which has invested $300 million in the battery company, and a notable management team got investors excited about QuantumScape. The company's board members have rich experience in the auto sector. Among others, QuantumScape has J.B. Straubel, Tesla's co-founder, on its board. Straubel served as Tesla's Chief Technology Officer from 2005 to 2019.
After the euphoria following QuantumScape's listing, investors likely realized the several risks that the company faces. Based on its own plans, QuantumScape is more than two years away from the commercial production of batteries. The company is yet to improve the separator that it plans to use in the batteries and increase the layers in its cells from 10 to over a hundred. Once it develops the technology, QuantumScape will need to ramp up manufacturing to produce cells viably. In short, it faces significant risks. The company's technology may not develop as it is hoping, or it may not end up being commercially viable.
QuantumScape has set up technical milestones for itself and says that it is progressing as per its plans. The company recently collaborated with Fluence Energy (FLNC -2.50%) to supply its solid-state batteries for use in Fluence's stationary energy storage products. Under the initial collaboration, QuantumScape will supply sample batteries to Fluence for testing and validation. After successful testing, the companies expect to enter into a large-scale supply agreement. Essentially, QuantumScape will have Fluence as a ready buyer once it starts commercial production of its batteries.
Overall, QuantumScape stock is an intriguing bet with a potential to generate windfall returns for patient investors with a high appetite for risk.
Image source: Hyzon Motors.
Hyzon Motors
Stock of fuel cell electric truck maker Hyzon Motors (HYZN -0.82%) is trading close to its all-time low price. Several factors are affecting the stock. To begin with, limited adoption of fuel cell electric vehicles (FCEVs) compared to battery electric vehicles (BEVs) so far may, in turn, further hurt the growth of FCEVs. That's because the more limited the refueling infrastructure is, the more restricted the growth of FCEVs will be, and vice versa.
Beyond the broader issue relating to the adoption of FCEVs, Hyzon Motors stock is being affected by certain company-specific factors as well. Hyzon was targeted by short-seller Blue Orca Capital for misleading its investors. Even though the company responded to all the short-seller's allegations, investors weren't fully convinced. What's more, the Securities and Exchange Commission (SEC) is now investigating the short-seller's allegations.
Despite the ongoing troubles, Hyzon managed to deliver 87 trucks in 2021, two more than its guidance of 85 trucks. Hyzon expects to generate lower revenue than it earlier expected for the year "due to product mix and multi-year revenue recognition for the majority of sales." Those factors aren't necessarily a concern, and the successful delivery of trucks is a key achievement for Hyzon.
The stock's price should rise if Hyzon can continue deliveries as per its plan and Blue Orca's allegations aren't found to be true. Clearly, those are big risks to watch.
Image source: Fisker.
Fisker
Fisker (FSRN 6.97%) is another interesting electric vehicle stock that has fallen around 24% in January as of this writing. The stock is still up around 24% from its 52-week low price. Fisker was founded by Henrik Fisker, who is known for his designs at Aston Martin, BMW, and Ford Motor Company. Fisker also founded Fisker Automotive, which went bankrupt in 2014.
By outsourcing the manufacturing to an experienced parts supplier, Magna International (MGA 0.02%), and partnering with CATL for its battery supply, Fisker seems to be ensuring that none of the past mistakes get repeated in his new company. Magna International has a 6% stake in the company. Fisker has also partnered with Foxconn to produce lower-priced models starting in the first quarter of 2024.
Fisker already has 23,500 reservations for the Sport, Ultra, and Extreme versions of the Fisker Ocean. The company is on track to start production of the Fisker Ocean in November this year.
With outsourced manufacturing to Magna, Fisker's cars should not encounter as many technical difficulties in real-world operations as other start-up EV manufacturers. However, whether the company succeeds in delivering cars with more features and at a lower price than the competition remains to be seen.
There seems to be a lot of interest in Fisker cars, as is evident by the rising number of reservations. If the company's cars are successful, Fisker's stock should rise significantly from its current levels. In the long run, Fisker's success depends on its ability to deliver cars profitably at scale.
