The last time I wrote about Mullen Automotive (NASDAQ:MULN) in May, I said MULN stock was barely trading over $1 for a reason. The California-based electric vehicle startup had just released a positive update about its ongoing battery testing. I warned investors not to take the bait.
Since then, MULN stock is up 16%, but I stand by what I said. With all the options available to investors, I scratch my head whenever I read about meme stocks like Mullen.
Could Mullen Automotive be the next Tesla (NASDAQ:TSLA)? I suppose it’s possible. Is it probable? That’s another story. So, for those interested in MULN stock, I want to put forth an alternative.
| MULN | Mullen Automotive | $1.32 |
Don’t Waste Your Money on Pre-Revenue Mullen Automotive
Mullen Automotive was expected to report earnings last week, but there’s been no announcement yet. Analysts are expecting a loss of 8 cents per share on revenue of $37.3 million for the quarter.
The company could announce any day now, but I have no clue where this revenue will come from given it’s nowhere near production-ready. Its 10-Q filing from March states: “We have not begun commercial operations and do not currently generate any revenue.”
For the six months ended March 31, Mullen Automotive had no revenue and a loss of $69 million.
Given the company has been hiring like crazy — including bringing former Tesla employee John Taylor on board — there is no way its losses don’t accelerate in subsequent quarters. And whatever the actual numbers turn out to be, the losses will get much worse before they get better. Mullen’s $65 million in cash on its balance sheet won’t cut it.
A Profitable Option to MULN Stock
Rather than throw your money at this speculative (at best) stock, I have another option with a similar name: Mullen Group (OTCMKTS:MLLGF), an Alberta-based logistics and transportation specialist.
The company got its start in 1949, when Roland Mullen bought a 1949 Chevrolet Maple Leaf truck to haul gravel. An initial public offering and many acquisitions later, Mullen Group is one of Canada’s largest logistics providers.
In the first quarter, Mullen generated 456.9 million Canadian dollars in revenue, with the bulk coming from its Less-Than-Truckload (LTL) and Logistics & Warehousing segments. And it posted adjusted operating income before depreciation and amortization (OIBDA) of 60.3 million Canadian dollars. On a year-over-year basis, revenue was up 57.3%, while OIBDA grew 46.7%.
Close to two-thirds of Mullen’s revenue was generated using its own equipment in the most recent quarter, while 35% was generated by contractors who are used when demand increases. In the first quarter of 2021, contractors were responsible for 29% of revenue. In other words, despite a shortage of drivers hitting the logistics industry, Mullen’s been able to hire contractors to get the job done.
Another thing to like about Mullen Group is that Chairman of the Board Murray Mullen is the third-largest shareholder in the company with a 5.2% stake.
Get Paid to Wait for a Rebound in Mullen Group
Shares of Mullen Group are down 23% from their October high, underperforming the broader market, which is off about 19% during that time. However, unlike buying shares of an index fund, you can get paid to wait for a rebound in MLLGF stock.
Since 2003, Mullen Group has paid out 1.35 billion Canadian dollars to its shareholders in the form of dividends and distributions. Its annual dividend of 56 cents is paid in monthly installments, with the stock currently yielding more than 6%.
Between Mullen Automotive and Mullen Group, I’d bet on the latter any day. Even if shares of the logistics company go nowhere in the near term, at least you’ll be collecting some cash in the form of a dividend.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.