Romeo Power (RMO) Jumps 60%: Should You Buy This Battery Stock?

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Summary

• Stocks of electric vehicle (EV) battery maker Romeo Power Inc (NYSE:RMO, RMO:US) secured a jump of nearly 60 per cent on Tuesday, April 6.
• The stock even hit a day high of US$ 13.64, recording a jump of about 70 per cent, before closing the session at a value of US$ 12.8.
• The latest spike has taken Romeo’s stock price growth up by over 29 per cent for the past one year and by nearly 54 per cent for the last three months.

Stocks of electric vehicle (EV) battery maker Romeo Power Inc (NYSE:RMO, RMO:US) secured a jump of nearly 60 per cent on Tuesday, April 6. The stock even hit a day high of US$ 13.64, recording a jump of about 70 per cent, before closing the session at a value of US$ 12.8. Its trading volume of Tuesday surged past 205 million.

The latest spike has taken Romeo’s stock price growth up by over 29 per cent for the past one year and by nearly 54 per cent for the last three months.

Let’s find out why this battery stock gained momentum on Tuesday.

Why Romeo Power (NYSE:RMO, RMO:US) Stocks Jumped On Tuesday?

The stock price surge came after Romeo Power announced on Tuesday morning some details of its five-year contract with truck manufacturer PACCAR Inc (NASDAQ:PCAR, PCAR:US).

A designer and manufacturer of lithium-ion batteries, Romeo Power will be supplying battery packs, modules and management systems to Paccar for its battery electric vehicles (BEVs).

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The agreement requires Romeo to supply batteries for PACCAR's BEVs Peterbilt 579 and 520 in Canada and the US through year 2025, the production of which is expected to begin after 2021.

Founded in 2016, the Los Angeles- headquartered company describes itself as an energy technology leader which provides large-scale electrification solutions for commercial electric vehicles. Romeo Power holds a 113,000 square-foot battery manufacturing facility where the battery designing and development process takes place inhouse.

How Are PACCAR Stocks Doing?

While Romeo’s shares surged on Tuesday following this announcement, PACCAR scrips dwindled by a little over one per cent.

1-year chart of PACCAR’s stock performance (Source: Refinitiv/Thomson Reuters)

The Washington-based truck maker, however, saw its shares climb by nearly eight per cent this year, while Romeo Power stocks shed about 43 per cent year-to-date (YTD).

PACCAR stocks record a price-to-earnings (P/E) ratio of 24.6, while its return on equity (ROE) is 12.92 per cent and return on assets (ROA) is 4.59 per cent.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.