It’s early – but one stock that’s performing exceptionally well in 2023 so far is Lucid Group. The electric vehicle manufacturer is matching rival Tesla, which is doing very well in its own regard – also up 86% year-to-date – and shows no signs of slowing down.
The reason for this rally is speculation that Lucid could be acquired by Saudi Arabia’s Public Investment Fund. As of now, this fund already owns 60% of the company – and a full takeover is rumored to be on the horizon.
Now, is there any reason to be excited about Lucid beyond these acquisition rumors? Experts still have doubts this company can compete with Tesla. After all, Lucid produced a mere 7,100 vehicles last year – a drop in the bucket compared to Tesla’s 1.3 million.
As such, one analyst believes Lucid will eventually fall back to earth – either when the rumors of acquisition come to fruition or when they’re put to rest. In fact, he’s forecasting a 57% drop and maintains a price target of just $5.
In the meantime, though, is it worth buying the hype around Lucid to try and capitalize on this run before it’s over? Or, is this stock a ticking time bomb? Through the VectorVest stock analyzer software, we’ve identified three things you need to see to make an informed, emotionless decision.
There’s No Denying LCID’s Excellent Timing – But With Very Poor Upside Potential and Poor Safety, is it Worth the Risk?
The VectorVest system simplifies your trading strategy by telling you what to buy, when to buy it, and when to sell it. It doesn’t get any easier than that! You’re told everything you need to know about an opportunity in just three simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).
These ratings are easy to interpret as they sit on a scale of 0.00-2.00 – with 1.00 being the average. But the best part is that based on these three ratings, the system provides you with a clear buy, sell, or hold recommendation for any given stock, at any given time. As for LCID, here’s the current situation:
- Very Poor Upside Potential: The long-term price appreciation potential for LCID is very poor compared to AAA corporate bond rates and risk. This is reflected by a very poor RV rating of 0.46. And, as mentioned earlier, the stock is far overvalued at its current price of $10.53. While one analyst set a price target of $5, VectorVest deems the current value to be just $2.06.
- Poor Safety: In terms of risk, LCID has poor safety – as indicated by the RS rating of 0.55. This rating is derived from an analysis of the company’s financial consistency and predictability, debt-to-equity ratio, and business longevity.
- Excellent Timing: The one thing LCID has going for it right now is excellent timing – which is validated by the RT rating of 1.41. This is calculated based on the direction, dynamics, and magnitude of the stock’s price movement. It’s taken day over day, week over week, quarter over quarter, and year over year to illustrate the full picture of a stock’s price trend.
All things considered, the overall VST rating for LCID is just fair at 0.96 – slightly below the average. So – what does that mean for you? Should you buy the hype swing trade this stock before it falls back to earth? Or, should you stay away from LCID? Don’t miss out on any opportunities again with VectorVest. Get a clear answer on your next move with a free stock analysis here.
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VectorVest advocates buying safe, undervalued stocks, rising in price. Right now, LCID is overvalued with very poor upside potential and poor safety – but it does have excellent timing, as you can see by looking at how it’s performed so far this year.
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