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Kensington Capital Could Be a Breakout Star in the Electric Car Space

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Largely under-the-radar blank-check company Kensington Capital Acquisition(NYSE:KCAC) is bound to gain traction in today’s marketplace. Investors should fully expect Kensington Capital stock to be a well-known name in the electric vehicle domain this year.

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It’s not a household name yet, so there’s still time to jump on board and grab a few shares. I’m a big fan of ground-floor opportunities, especially in red-hot niches like electric cars. Shell companies are also all the rage nowadays, but Kensington Capital is unique among them.

That’s because the company that Kensington Capital’s helping to go public doesn’t sell electric cars. At that same time, the company will benefit from the rapid expansion of the global electric and hybrid vehicle industries.

Some folks would call it a “picks and shovels” type of trade. In other words, a company doesn’t have to sell electric cars. Instead, you can bet on a company that sells an essential part for those vehicles.

It’s a smart way to invest, and forward-looking traders can take advantage of this early-stage opportunity.

A Closer Look at Kensington Capital Stock

The pattern you’ll see in Kensington Capital stock is similar to what you might have seen with other recent blank-check companies’ stocks. A rush of excitement surrounding an acquisition can really take the price of a stock to new heights.

This is precisely what took place with Kensington Capital stock recently. Prior to September of this year, the share price was suppressed below $10. On Sept. 3 and 4, however, the stock leaped above $20 and peaked at $25.75.

Next came a cooling-off period as Kensington Capital stock eased back below $20 in the following days. By Sept. 18, the share price closed slightly below $18.

This need not be a cause for concern as the market is still in the process of determining an appropriate price range for Kensington Capital stock. If your time horizon is long-term, then it’s not a bad idea to start accumulating shares today in anticipation of a run-up when the company earns more business and popularity.

The Facts of the SPAC

Kensington Capital is a special purpose acquisition company or SPAC. It’s not necessarily the world’s most exciting firm, but through a merger it’s helping to bring electric car battery supplier QuantumScape to the market.

Consequently, you can probably expect to see QuantumScape stock trading on the New York Stock Exchange under the ticker symbol QS. Still, it’s possible to own Kensington Capital stock in anticipation of that event.

This is a true “unicorn” (billion-dollar start-up company) with an enterprise value of $3.3 billion. Financial backers include none other than Volkswagen(OTCMKTS:VLKAF) and the Qatar Investment Authority (the sovereign wealth fund of the Persian Gulf).

And by the way, QuantumScape is backed by Bill Gates. A little bit of name dropping doesn’t hurt, right?

Solid-State Potential

Let’s not get star-struck with the Bill Gates connection, though. It’s the Volkswagen connection that’s key here.

As it turns out, QuantumScape plans to embark on a joint venture to mass-produce solid-state batteries for Volkswagen. Granted, you might not see a Volkswagen in every driveway in America. Yet, the automaker remains one of the world’s largest.

Moreover, these are going to be state-of-the-art batteries. J. B. Straubel, Tesla’s(NASDAQ:TSLA) former chief technology officer and currently a QuantumScape board member, is duly impressed with the battery’s potential:

“QuantumScape’s solid-state anode-less design represents the most elegant architecture I’ve seen for a lithium-based battery system, and the company has an opportunity to redefine the battery landscape.”

First in line is Volkswagen, and who knows which automakers will be lining up next to avail themselves of this exciting battery technology?

The Bottom Line

Clearly, owning Kensington Capital stock isn’t just about SPAC mania. The deeper issue here is one of innovative battery technology and a “picks and shovels” company that’s mostly unknown today but will, soon enough, be a celebrity in the niche.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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