PreMarket Prep Stock Of The Day: Workhorse Group

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Stocks that are waiting for a major catalyst can remain in consolidation for quite some time. On occasion, another sub-catalyst can move the issue in the interim. That's the case with the PreMarket Prep Stock of the Day: Workhorse Group WKHS. 

Workhorse's Major Summer Rally: After ending May at $2.48, Workhorse Group caught a major bid just as the electric vehicle market was heating up.

By mid-June, the issue worked its way over $4 and made a major move on June 22, rallying from $4.88 to $5.92. Then the momentum really kicked in. 

Over the next eight sessions, Workhorse rallied to $22.90 on July 2 and posted its all-time high that day at $20.91.

Workhorse's Much-Needed Pullback: Following the torrid rally, Workhorse retreated to $13.36 and then resumed its move higher. For the most part, the stock has been in a trading range ever since between that low and $19.68, with a vast majority of the trading action taking place between $15 and $18.

Workhorse Waiting For Major Catalyst: Investors in the issue are banking on the company winning a Postal Service contract potentially worth upwards of $6.3 billion.

Workhorse has about $70 million in back orders for its electric vehicles, and according to its CEO, securing the contract would be "a potential game-changer" for the company.

Workhorse's Sub-Catalyst Monday: Before the open Monday, the company announced agreements with Hitachi that will support higher production. Hitachi will review Workhorse's operations and provide recommendations to support increased production requirements.

Workhorse's Premarket Moves: When the issue was being discussed on the show Monday, it was trading at the $17.80 area. Co-host Dennis Dick said the issue was in “consolidation station, and if you want to strike, this is the time.”

The stock is all about the postal contract, he said. 

"If they do not get it, it is going under $10. If they do get it, it's going over $30."

The author of this article noted the premaket high as being $18.05. Since that level did not coincide with a daily high, investors were alerted to the issue’s Aug. 26 high of $18.98 as a notable resistance point.

Workhorse Price Action: After a higher open, Workhorse had a brief retreat but found support under the top of Friday’s range ($17.11) and well above Friday's closing price of $16.39, only reaching $16.88.

Since making that low, Workhorse has challenged the aforementioned resistance level and come up just shy, with $18.93 standing as the high for the session. 

The stock was trading 10.95% higher at $18.18 at the time of publication Monday. 

The full discussion on the issue from today’s show can be found here: