Green Power Motor, When Two Trends Collide
GreenPower Motor (NASDAQ:GP) may be one of the most perfect plays on EV we have ever seen. The company is not only an up-and-comer in the EV industry but also well-positioned for the RV industry as well. On the one hand, we have a revolution in auto manufacturing that should produce a 40%+ CAGR over the next decade or two. The general consensus is that EV will increase its market share from 3% last year to over 50% in that timeframe so there is plenty of room for growth along that avenue.
Turning your attention to the RV market, the pandemic sparked a trend to the outdoors that will take years to run. Demand for RVs increased more than 30% last year and drove a triple-digit increase in backlog that is expected to produce another 30%+ year for the industry. The way we understand it, backlogs in the RV industry were so high it would take a quarter or two just to fill committed orders and then another few quarters to catch up with inventory. The takeaway, Green Power is an EV van and chassis manufacturer making inroads into RV, short-haul delivery, passenger applications, and other uses for cutaway van style vehicles and at the nexus of two robust trends.
Green Power Inks Deal With Berkshire Hathaway Company
Green Power recently inked a deal with Berkshire Hathaway (NYSE:BRKa) Company Forest River that has shares moving. Forest River is a well-known manufacturer of RV’s, trailers, pontoon boats, and delivery vans and has a committed order with Green Power. The order is for up to 150 of the EV Star CC cutaway van cab/chassis combinations for use in a new line of products.
We can only speculate on the type of projects Forest River has in mind but we are sure they will meet with success. The first 6 are scheduled for delivery this quarter with the remainder coming over the next 36 months according to a timeline that is still TBD. Aside from the order, the takeaway here is that this company is in production and ready to ramp.
David Wright, President of Forest River's bus divisions added,
"Forest River has been looking for a purpose-built all-electric chassis that has the range and the carrying capacity that our customers and dealers demand. Zero-emission vehicles are where the markets are going, and the GreenPower EV Star CC gives us the flexibility to address a variety of unmet needs in the commercial market."
Ryne Shetterly, VP of Sales and Marketing at GreenPower also commented:
"At GreenPower, we view this as a tremendous opportunity to enter a relationship with one of the most highly respected and largest volume names in the industry. Our EV Star CC will now have representation in select Forest River distribution channels and the amount of value that brings to GreenPower is tremendous."
The Shorts Are Out For Green Power
At least one major short-report has come out on Green Power. White Diamond Research issued a $5 price target or 80% downside target for the stock citing factors we feel are rear-looking and shortsighted. In their view, the company is leaning to heavily on California and a single large client for its revenue. Recent changes in California law will impact that revenue stream but does not factor in the industry growth we expect this company to see. The deal with Forest River is just the tip of the iceberg of clients we expect to see deepen and broaden very quickly. Don’t forget, there are others in the EV and RV industry eyeing partnerships that give evidence to just how lucrative this market is. And that's not counting growth into bussing, passenger applications, and delivery.
The Technical Outlook: It’s Almost Time To Buy Into Green Power
Shares of Green Power have been in decline along with the broader EV industry over the last month or so. Share prices are now trading near the $24 level after staging a 38% correction and looks like they could rebound any day. Not only is the price action showing signs of support at a potentially strong level but the indicators are diverging from the fresh lows and confirm that support. The MACD and stochastic are both diverging from the new lows and consistent with support if not a rebound in price action. While near-term action is still questionable, we see this market as oversold and at an extreme just waiting for an excuse to rally again. And to set new highs.
