What Is a SPAC? 6 Best SPACs to Invest In

6 top SPAC stocks investors should know.

The rise of SPACs, or special-purpose acquisition companies, has been something to behold. Rather than go public through an initial public offering, more private companies are opting to debut on stock exchanges via an acquisition at the hands of a SPAC, a publicly traded chunk of funds devoted to taking private companies public through mergers. The numbers bear out the trend’s momentum: In 2019, 59 SPACs were formed. In 2020, that number rose to 248. Already this year, there have been 428 SPACs that have hit the market. Also known as “blank-check companies,” SPACs traditionally have only a few years to acquire a private company before they have to refund money to investors. Buyers beware: SPACs tend to be risky investments, so they’re generally not appropriate for conservative investors. But if you have an eye for upside and a healthy appetite for risk, here are six of the best SPACs to buy now.

Soaring Eagle Acquisition Corp. (SRNG)

Experienced management teams are one thing investors often look for when evaluating SPACs that have yet to make a deal. Soaring Eagle Acquisition Corp. has that in spades, with Harry Sloan and Jeff Sagansky having brought to market DraftKings Inc. (DKNG) and Skillz Inc. (SKLZ) in 2020. While SKLZ has been extremely volatile, DKNG ended up being one of the most successful SPACs. Soaring Eagle hopes to repeat that success with Ginkgo Bioworks, a gene-editing company whose platform aims to “enable customers to program cells as easily as we can program computers.” With gene editing becoming one of the most promising areas in modern science, Ginkgo has long-term upside if its platform picks up traction. Soaring Eagle is expected to begin trading with Ginkgo’s name on Sept. 17 under the ticker DNA.

CM Life Sciences III Inc. (CMLT)

Next on the list of the best SPACs to buy is CMLT, which recently formalized an agreement with EQRx Inc. to take it public through a reverse merger. EQRx markets itself as “a new type of pharmaceutical company committed to developing and delivering important new medicines to patients at radically lower prices.” The company is doing this largely by acquiring promising late- and clinical-stage drug candidates in high-cost treatment areas, plus a strategy of partnering with drug discovery platforms. If you’re a fan of investing where the major players are putting their capital, EQRx offers you that opportunity, with a who’s who of venture investors that includes SoftBank Group, Fidelity, Bain Capital, Verily and Andreessen Horowitz. The transaction is expected to close by the end of the year, with the company trading under EQRX.

Altimar Acquisition Corp. II (ATMR)

Like gene editing, 3D printing is another area of enormous potential. That’s where Fathom Digital Manufacturing Corp., after its public debut at the hands of ATMR, is expected to become the newest public player in an emerging yet fairly concentrated field. The company boasts a proprietary software platform, 90 additive manufacturing machines and almost 450,000 square feet of manufacturing capacity, and its technology can work with both plastic and metal materials. Already generating cash flow, the company claims to dramatically accelerate the product development pipeline for a number of industries, rapidly producing things as varied as mock-ups of aircraft interior assemblies and generator prototypes for power companies. The transaction should close in the fourth quarter, giving the company a roughly $1.5 billion valuation. The company will trade on the New York Stock Exchange under the symbol FDMG.

TPG Pace Solutions Corp. (TPGS)

Vacations are refreshing, but wouldn’t it be nice to make money from them? That’s what Vacasa, one of the top vacation rental management companies in North America, does. It recently struck a deal to go public through the TPG Pace Solutions SPAC in a combination that will result in a valuation of about $4.5 billion under the future ticker symbol VCSA. Part of what makes TPGS one of the best SPACs to buy is the growing vacation rental market, where Vacasa enables guests to book stays at more than 30,000 homes. The company expects about $1.6 billion in gross bookings in 2021 and sees revenue growing at a 31% annual clip over the next two years.

First Reserve Sustainable Growth Corp. (FRSG)

There seems to be a trend among the best SPACs to buy these days: Many of them hail from fast-growing industries. This one is no different as First Reserve Sustainable Growth reached a deal to take EO Charging public through a SPAC merger. EO Charging is an electric vehicle, or EV, charging company servicing commercial and governmental fleets in Europe. With about 50,000 chargers in more than 35 countries, EO Charging provides services to companies including Amazon.com Inc. (AMZN), DHL, Tesco and Uber Technologies Inc. (UBER). As EVs continue to grow in importance globally, expect EO Charging’s relevance to grow with it. When the company goes public after the transaction — expected to complete in the fourth quarter — EO Charging will debut on the Nasdaq under the ticker EOC.

Merida Merger Corp. I (MCMJ)

Last on the list is Merida Merger Corp. I, which will soon be merging with Leafly, an e-commerce subscription platform focused on another area of high growth: marijuana. Leafly claims an annual audience of more than 125 million visitors across its website and mobile app, as well as a large market share among cannabis industry players. “Approximately 55% of North American retail licensees are currently subscribed to its marketplace and advertising services,” the press release announcing the combination says. Leafly allows customers to compare, select and reserve cannabis products from thousands of retailers, and Leafly can sit back and benefit without ever dealing with the controversial plant directly. Marijuana legalization trends in the U.S. are also promising, but at an expected enterprise value of just $385 million, this SPAC, which will eventually list on the Nasdaq under the LFLY symbol, is one of the riskier on this list.

Six of the best SPACs to invest in now:

Soaring Eagle Acquisition Corp. (SRNG)
CM Life Sciences III Inc. (CMLT)
Altimar Acquisition Corp. II (ATMR)
TPG Pace Solutions Corp. (TPGS)
First Reserve Sustainable Growth Corp. (FRSG)
Merida Merger Corp. I (MCMJ)

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What Is a SPAC? 6 Best SPACs to Invest In originally appeared on usnews.com

Update 09/13/21: This story was published at an earlier date and has been updated with new information.

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