Examining Electric Vehicle Stocks that Experienced Price Rise

Electric vehicles have recently excited investors as important collaborations were announced by two companies that gave their stocks a boost.  

Examining Electric Vehicle Stocks that Experienced Price Rise 

A financially fulfilling experience in stock trading comes when you identify an opportunity that could be a potential goldmine. For beginners, commission free trading helps maximize earnings. But as you go along, you need to invest in stocks and industries that have great potential.    

Recently, the market has been talking a lot about the electric and alternate fuel source vehicle industry. Wednesday, January 13 saw electric vehicle (EV) stocks rise by double digits. Nikola ($NKLA) and Canoo ($GOEV) were those impressive stocks, rising 11.3% and 16.3% respectively.  

What the Potential for Nikola Is

Nikola manufactures electric trucks, unlike Tesla ($TSLA) that focuses on electric passenger cars, sports cars and SUVs. Nikola also develops hydrogen fuel cells that can power vehicles. Motley Fool analyst Howard Smith points out the reason for the stock’s  rise is the announcement that the company has reached an agreement with the utility officials in the state of Arizona for developing fueling solutions based on hydrogen to boost the transportation industry.   

(Image source: Nikola Corporation – NKLA – Stock Price & News | The Motley Fool)

Smith reminds that 2020 was quite a volatile year for Nikola, as the above-mentioned chart by Motley Fool shows. But any news emerging about its electric trucks and general advancements in hydrogen fuel cells helped raise the stock. 

There have been specific factors such as the Plug Power and Renault partnership for hydrogen fuel cell commercial vehicles (CV), which gave investors an idea of the potential of vehicles powered by hydrogen fuel cells. That helped instill confidence in Nikola’s business.

Canoo’s Business Collaboration 

As for Canoo, the EV startup reportedly got a boost after news emerged that it had talks with Apple regarding an electric vehicle project. The following chart describes the stock’s bounce back: 

(Image source: Canoo Holdings Ltd. – GOEV – Stock Price & News | The Motley Fool)

While vehicle production isn’t likely to continue till 2022, it has expanded its future model line to include a van, a delivery vehicle, a “home-truck” as well as a “home-sport” car.  

Another EV stock that had a great Wednesday was Northern Genesis ($NGA). The stock had a 9.1% rise.

(Image source: Northern Genesis Acquisition Corp. – NGA – Stock Price & News | The Motley Fool

It excited investors with news about merging its business with Lion Electric, the electric truck maker. Lion Electric, in turn, has reported a deal with tech giant Amazon ($AMZN) which could potentially involve investment from the e-commerce giant. 

Meanwhile, Tesla stock is also hitting new highs, and now has a market capitalization exceeding $800 billion.   

With advanced stock market trading software, you can identify stocks performing well. Expert opinion also matters.  

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Based on: 

Why Nikola and 2 Other EV Stocks Were Up Double Digits Today | The Motley Fool  

Also referred and linked: 

Plug Power and Renault Partner for Hydrogen Fuel-Cell Vehicles | The Motley Fool 

Tesla Stock: Buy, Sell, or Hold at $850? | The Motley Fool 

Nikola Corporation – NKLA – Stock Price & News | The Motley Fool 

image of stocks coverage ratios header

What Is Coverage Ratio and How Calculating It Helps?

Company research is an essential element of making stock trading decisions. Helping in this research are calculations such as the coverage ratio.    

What Is Coverage Ratio and How Calculating It Helps? 

Coverage ratio is the measurement of a company’s capability to meet its financial obligations such as dividends and interest payments as well as its debt. It significantly helps in company research and is something you rely on along with advanced trading software.  

A higher coverage ratio makes it easier for the company to fulfil its financial obligations. Investors and analysts study the historical trend of a stock’s coverage ratios to detect whether the financial position of a company has changed.    

How Crucial Is the Coverage Ratio?

  • Coverage ratios help detect companies that could be heading for troubled financial waters. 

Calculating Coverage Ratio

  • Interest coverage ratio/Interest earned ratio

It measures a company’s ability to pay the interest of its debt.

It is calculated as: 

EBIT / Interest Expense

EBIT refers to earnings before interest and taxes. A satisfactory interest coverage ratio is usually 2 or more.  

  • Debt Service Coverage Ratio (DSCR)

It measures the ability of a company to pay all its near-term debt principal plus interest payments 

It is calculated as:

Net operating income / Total Debt Service

A figure of 1 or above indicates the company’s earnings are sufficient to cover all debt obligations

  • Asset Coverage Ratio

It measures a company’s balance sheet assets.

It is calculated as:

Total Assets – Short-term Liabilities / Total Debt

Total assets are buildings, machinery, inventory, land and other such tangible assets

A 1.5 ratio is satisfactory for utilities, while a ratio of 2 is satisfactory for industrials. The coverage ratio is one of the many indicators that can help stock traders gauge the worth of a business. It helps while trading stocks online.  

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