While the 31 days of May aren't necessarily known for seasonal strength in the financial markets, traders can still identify needles in the proverbial haystack that offer value, growth, or possibly even both.
This might require a keen eye for downtrodden equities and temporarily distressed businesses with comeback potential along with a willingness to take on risk in the quest of bigger rewards. As the weather warms up and trading volumes wither, outsized share-price moves could occur -- providing an opportunity for investors.
Here are three standouts, albeit on the more speculative end of the spectrum, that may be worthy of your due diligence right now.
Mullen Automotive gets no respect
Mullen Automotive (MULN 1.04%) focuses on electric vehicle (EV) and energy management technology through a majority-owned subsidiary. This has enabled Mullen to develop potentially game-changing vehicle electrification technology, including advancements that could increase EV range by 60% to 70%.
However, investors have turned skeptical, sending the shares down more than 80% over the past five years -- and by 20% just this past week. Perhaps some traders pigeonhole Mullen as just another EV start-up that's headed for zombie status, but that's an overblown fear as Mullen has a decent-sized cash runway of $116 million and hundreds of millions of dollars' worth of purchase orders.
Mullen is busy fulfilling those orders from both the public and private sectors. These include a $680,000 contract to install and test technology it believes could substantially increase the "driving range and efficiency of any electric vehicle." Right now, the company is testing that technology on 40 vehicles for the District of Columbia.
That has been followed by a second order of eight electric cargo vans from the University of North Carolina at Charlotte; and a $63 million, 1,000-truck order from Randy Marion Automotive Group, a commercial EV dealership. Brad Sigmon, a vice president at Randy, says his company continues to "receive great interest for Mullen's commercial vehicles."
The price destruction of Mullen stock is breathtaking, but is it justified? That question could be better answered soon when the company reports near-term operational progress. Mullen envisions Class 3 trucks "rolling off the line with anticipated deliveries and revenue in August and September 2023" and it is working diligently to fulfill its orders.
While success isn't guaranteed, the stock seems to have total failure priced in. Mullen's near-term pain could be the risk-tolerant investor's gain.
Hail a ride in May with Uber stock
Uber Technologies' (UBER -0.89%) shareholders had a dreadful 2022 -- far worse, oddly enough, than in COVID-rocked 2020. However, investors have been heartened by recent results as Uber surprised analysts and nearly achieved the breakeven point on earnings per share (EPS) in this year's first quarter. Uber shares shot up more than 20% on the heels of this news.
CFO Nelson Chai declared that Uber "delivered record profitability" in Q1 2023 although that perhaps only tells part of the story. Uber reported adjusted EBITDA of $761 million (up 353% year over year -- not too shabby) but also lost $0.08 per share. Still, that's a vast improvement over the $3.04 per diluted share that Uber lost during the year-earlier quarter.
The company's 29% year-over-year revenue growth and 19% increase in gross bookings really affirm Uber's growth story -- demonstrating that the ride-hailing company could still drive business despite sticky inflation. Further, Uber anticipates $33 billion to $34 billion in current-quarter gross bookings compared to $31.4 billion for Q1, along with adjusted EBITDA of $800 million to $850 million.
In other words, Uber is bracing for another impressive quarter, which should bolster profits and strengthen the stock price.
Don't pigeonhole SoFi amid the banking crisis
The failure of some banks recently that over-leveraged themselves on Treasury bonds and/or cryptocurrency has prompted some jittery traders to dump financial stocks wholesale.
However, it's not fair to lump SoFi Technologies (SOFI -0.42%) into that category. SoFi (which is short for "Social Finance") straddles the line between app-based tech firm and chartered bank, making the company thoroughly modern.
SoFi has several businesses, including a lending unit, a technology platform that includes the SoFi app, and a financial services arm that encompasses a range of trading and advisory solutions. In other words, SoFi is a one-stop shop that's unafraid to upend stodgy, ultra-conventional financial firms.
But this doesn't mean SoFi has behaved irresponsibly as others did. Instead of scrambling to conserve capital due to past misjudgments, SoFi remains confidently in expansion mode and is even venturing into mortgage lending with its acquisition of Wyndham Capital.
Just to drive home the point that it isn't the next troubled bank, SoFi opted to offer its large depositors up to $2 million worth of FDIC insurance instead of the typical $250,000.
Yet, SoFi stock is down significantly since the company reported its Q1 earnings on May 1 even though it demonstrated year-over-year revenue growth and a shrinking net loss. Granted, SoFi stock has fallen since late 2021, before the recent banking tumult started. Some investors may have been concerned about SoFi's innovative approach though they should take comfort in the fact that SoFi became a chartered bank last year.
The skeptics may have also taken issue with SoFi's lack of profitability, but the company has consistently beaten quarterly EPS estimates and isn't deeply unprofitable on a per-share basis. Hence, SoFi Technologies appears to be an unreasonably punished neo-bank to watch and consider a small share position in now.
