Even with minuscule revenue for most electric vehicle (EV) charging companies, EV charging stocks have commanded premium valuations. Further, there is a flurry of business combinations and SPACs (special purpose acquisition companies) in this space. But the emergence of this sector does not come as a surprise; without a proper charging network, the accelerated adoption of electric vehicles would be pretty much impossible.
Of course, President Joe Biden’s infrastructure plan has been a topic of many conversations as a result. A key focus of the plan is to build a comprehensive charging network.
Back in March, estimates claimed that $300 billion would be needed to build a global EV charging network by 2030. Of this, $50 billion is likely needed in the United States. Yet, other research claims that an $87 billion investment in U.S. charging is needed over the next ten years. This poises EV charging stocks to see positive tailwinds in the coming decade.
So, all that said, let’s take a look at these seven EV charging stocks. These stock picks look very attractive from a long-term investment perspective.
- Chargepoint (NYSE:CHPT)
- Blink Charging (NASDAQ:BLNK)
- EVgo (NASDAQ:EVGO)
- TPG Pace Beneficial (NYSE:TPGY)
- Spartan Energy Acquisition III (NYSE:SPAQ)
- Kensington Capital Acquisition II (NYSE:KCAC)
- Decarbonization Plus Acquisition II (NASDAQ:DCRN)
EV Charging Stocks to Buy: Chargepoint (CHPT)Source: Michael Vi / Shutterstock.com
CHPT stock is one of the top EV charging stocks to consider right now. After touching highs above $49, the stock currently trades around the $22 mark. These levels seem attractive for accumulation.
From a business model perspective, Chargepoint derives revenue from sale of hardware, software and services. The company has a recurring software-as-a-service (SaaS) model that’s attached to its hardware. So, as those sales increase, the company’s recurring revenue should also trend higher. This is positive for margin expansion over the long term.
In terms of market share, this company is also already the largest EV charging company in North America. Additionally, Chargepoint is expanding its presence in Europe. In July, it acquired an e-mobility technology provider for a consideration of 250 million euros ($296.2 million). This will likely boost its presence in markets like Germany, Austria and Switzerland.
Finally, it’s worth noting that as of Q1 2022, CHPT reported cash and equivalents of $610 million. Chargepoint therefore has financial flexibility to pursue aggressive expansion. Consider CHPT stock as its positive industry tailwinds likely support an impending rally.
Blink Charging (BLNK)Source: David Tonelson/Shutterstock.com
Lately, there have been concerns related to the valuation that BLNK stock commands. However, it’s worth noting that the stock has remained relatively resilient in the range of $25 to $30. What’s more, with a short interest of more than 30%, BLNK stock may also be a short-squeeze candidate.
As an overview, Blink Charging has deployed more than 23,000 total charging stations in the world, both commercially and residentially. For the first half of 2021, the company reported revenue of $6.6 million, which was higher by 129% on a year-over-year (YOY) basis.
For Blink, it’s likely that revenue growth will accelerate further in the coming quarters. Just for Q2 2021, the company contracted, sold or deployed 3,264 charging stations. That’s compared to just 380 stations in Q2 2020. Clearly then, the company is pursuing aggressive expansion.
Back in May, Blink announced the acquisition of Blue Corner. That company has been growing its presence in Europe. For instance, in July, Blue Corner signed an exclusive agreement with KU Leuven to install 500 EV charging stations across Belgium.
With cash and equivalents of $195.6 million, Blink is positioned to sustain both organic and inorganic growth. Overall, this pick of the EV charging stocks seems positioned for a rally after the recent consolidation.
EV Charging Stocks to Buy: EVgo (EVGO)Source: Sopotnicki / Shutterstock.com
Next up on this list of EV charging stocks to buy, EVGO stock has touched highs past $24 after listing. However, this stock has recently been trending lower due to valuation concerns. At around $9 today, it now looks attractive given the infrastructure-spending tailwinds.
EVgo is on a high-growth trajectory, with the company practically doubling deployments in Q2 2021 as compared to Q1 2021. For the quarter, it deployed 104 new charging stations. Furthermore, the company has 2,067 charging stations in its “active engineering & construction pipeline.” Once these stations are deployed, it will likely see a meaningful surge in revenue.
To put things into perspective, EVgo has guided for revenue of $20 million for 2021. However, revenue is expected to increase to $596 million by 2025 and further to $1.3 billion by 2027. Given the accelerating focus on charging infrastructure, this guidance seems realistic.
Recently, the company also became a preferred charging provider for General Motors’ (NYSE:GM) fleet service. Additionally, it launched a new program with Chevrolet that allows vehicle owners to get EVgo charging credit. These partnerships will likely boost growth.
Lastly, though, it’s worth noting that the company expects its adjusted EBITDA margin to expand to 32% by 2025. All told, there is visibility for healthy operating cash flows once its network throughput expands in the next few years.
TPG Pace Beneficial (TPGY)Source: VanderWolf Images / Shutterstock.com
Next up on this list of EV charging stocks is a special purpose acquisition company called TPG Pace Beneficial. In December 2020, TGP announced a SPAC business combination with EVBox at an implied enterprise value of $969 million.
By March, EVBox had already delivered 235,000 charging ports. The company has a primary focus in Europe, but has also been expanding presence in North America. What’s more, after completion of the business combination, the company will likely have some $420 million in cash. This will provide flexibility for aggressive growth in the next 12 to 24 months.
For the current year, EVBox has guided for revenue of 120 million euros ($142.1 million). Revenue is expected to increase to 372 million euros ($440.7 million) by 2023. Further, software and services are likely to have an increasing share of total revenue as the company’s network expands.
Another important point to note here is that EBITDA breakeven is guided for 2023, which is attractive. If robust growth sustains over the next five to ten years, the company will be positioned to deliver healthy cash flows.
True, TPGY stock has declined by almost 60% year-to-date (YTD). After some euphoria, the SPAC space has cooled off. That’s one reason for the decline. But, post business combination, EVBox will still be a solid name to hold for the long term.
EV Charging Stocks to Buy: Spartan Energy Acquisition III (SPAQ)Source: Nick Starichenko/InvestorPlace.com
In yet another SPAC deal, Spartan Energy Acquisition announced a business combination with Allego. The latter has a pan-European EV charging network, landing this combo squarely on our list of EV charging stocks to buy. The deal will result in total proceeds of $702 million for the combined entity. Further, the pro-forma implied equity value of the company is $3.14 billion.
As an overview, Allego already has 26,000 public charging ports across 12 countries in Europe. Plus, the company expects operational EBITDA to be positive in 2021. Conversely, most other competitors have been reporting significant cash burn. Of course, SPAQ stock is also attractive because of the cash proceeds, which will help accelerate top-line growth.
As a part of the growth strategy, the company is focused on ultra-fast charging. By 2026, this segment is likely to have a gross margin of 55%. The company also expects an average pay-back period of 3.6 years (including incentives) per site. Further, the 7-year IRR is expected at 47.8%. Therefore, the long-term cash flow outlook is robust.
Overall, this business combination looks attractive from a long-term perspective. The implied valuation might seem stretched, but SPAQ and Allego are poised for strong growth over the years to come.
Kensington Capital Acquisition II (KCAC)Source: Shutterstock
Of course, SPACs have provided investors with some extremely attractive opportunities in the electric vehicle and EV charging space. To add to that trend, back in June, Wallbox Chargers announced a business combination with Kensington Capital Acquisition II.
Like other EV charging stocks on this list, Wallbox is a developer of EV charging solutions for residential, semi-public and public use. The company already has product presence in 67 countries with sales of over 100,000 units. Additionally, the SPAC deal will raise gross proceeds of $330 million, which will be utilized for growth acceleration.
Wallbox already has in-house manufacturing presences in Europe and the Asia-Pacific region. The company also intends to commence manufacturing in the United States by 2022. In terms of growth, it expects revenue of $79 million for 2021 but revenue of $1.2 billion by 2025. Additionally, EBITDA will likely break even in 2024. True, cash burn may imply this company will need additional funding at some point. However, if revenue growth is as guided, KCAC stock is still likely to trend higher.
Currently, KCAC stock has remained relatively sideways. That said, the business combination implies a pro-forma enterprise value of $1.5 billion. So, I don’t see valuation as a concern if this name can deliver growth in-line with guidance. To that end, Wallbox reported 300% revenue growth YOY for the first half of 2021.
EV Charging Stocks to Buy: Decarbonization Plus Acquisition II (DCRN)Source: Shutterstock
Closing my list of EV charging stocks to buy is one final, interesting SPAC business combination. In May 2021, Tritium announced a business combination agreement with Decarbonization Plus Acquisition II.
Tritium has been in business for several years. Importantly, the company’s revenue has grown at a compound annual growth rate (CAGR) of 56% in the last five years. However, the growth for EV charging infrastructure is at an inflection point.
The company therefore expects revenue to accelerate to $982 million by 2025. This growth is likely to be fueled by 17 new products, software modules and “expanded service coverage” (Page 33).
Lastly, it’s also worth noting that the company expects to be EBITDA and free cash flow positive by 2023. I would take these projections with a pinch of salt. However, there is little doubt that the best part of growth is still to come for DCRN stock.
On the date of publication, Faisal Humayun did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector
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PEI Connect: Is Europe facing an energy crisis?
High gas prices and low renewable energy yield and could prove challenging for Europe, as the region heads for chilly winter months.
The post PEI Connect:…
PEi Connect provides a brief look at what got our attention during the week (09-16 Sep), and first up we focus on the impact of high gas prices and low renewable energy yield and what that could mean for Europe, as the region heads for chilly winter months.
Europe’s power crunch
European power prices are reaching record highs due to high gas prices and high carbon prices and analysts warn the region could face supply crunches as wind levels drop and coal is phased out.
An interesting analysis by CNBC’s Sam Meredith provides some insight into the causes behind market nervousness the potential impact of market volatility. Read more.
Global collapse of coal pipeline
A new report released by climate think tank E3G has found a 76% reduction in proposed coal power since the Paris Agreement was signed in 2015, bringing the end of new coal construction into sight.
Report author Chris Littlecott, Associate Director at E3G, said: “The economics of coal have become increasingly uncompetitive in comparison to renewable energy, while the risk of stranded assets has increased. Governments can now act with confidence to commit to ‘no new coal’.” Read more the about report.
TIME Magazine’s top 100 influences
TIME has released its list of the top 100 influential people of 2021. On the list are International Energy Agency executive director, Fatih Birol, Tesla CEO, Elon Musk and vice president of the European Commission, Frans Timmermans.
Cities are key to our net zero future
An interesting article by the International Energy Agency (IRENA) looks at how cities can catalyse the shift to a low-carbon future.
The dominance of fossil fuels in the urban energy supply puts cities on the frontline of climate change however, there are four cities that, despite limited funds and policy support, are taking sustainable energy action.
From solar power in Uganda to geothermal powered heating in Serbia. Read more about how cities are innovating to achieve energy transition.
Connect with us next week for another selection of interesting sector news.
Until then, take care, stay safe and power on.
The PEi Ed team ????renewable
Romeo Power and Dynexus Technology collaborate to introduce advanced battery sensing and diagnostics for battery-electric commercial vehicles
Romeo Power and Dynexus Technology, a provider of battery sensing solutions and data-driven battery intelligence, will collaborate to integrate Dynexus…
Romeo Power and Dynexus Technology, a provider of battery sensing solutions and data-driven battery intelligence, will collaborate to integrate Dynexus Technology’s actionable battery performance and health sensors into Romeo Power’s battery ecosystem.
The technology developed by Dynexus will initially be utilized for incoming cell quality control and end-of-line verification, as well as module and pack diagnostics and prognostics, enabling multiple opportunities to reduce total cost of ownership for Romeo Power’s customers.
Dynexus generates critical data that can accelerate the qualification process of cells and batteries, including cell screening and matching, further improving quality control, safety and reliability of our battery systems. We look forward to collaborating with Dynexus to advance the electrification of commercial vehicles.—AK Srouji, CTO of Romeo Power
Dynexus’s award winning and patented Inline Rapid Impedance Spectroscopy (iRIS) sensors generate near real-time, rich, frequency-based battery data that provide information about the state of the battery physico-chemistry. Traditional measurement methods treat the battery as a blackbox. The Dynexus sensor “looks” inside the battery and generates a “fingerprint” or signature that uniquely describes a battery’s health, degradation, and therefore safety.
Romeo Power will integrate iRIS into its battery systems, providing a new class of battery data that, until now, was only available for research purposes and was not practical as a commercial sensor or tool. This technology enables measurements that typically take 30 minutes to be reduced to 10 seconds or less.
Dynexus Technology’s iRIS system has been validated in Romeo Power’s in-house testing lab and demonstrates superior accuracy and repeatability. The iRIS system also has high voltage capability and enables measurements under dynamic battery conditions. In addition to screening and quality control applications, Romeo Power intends to implement iRIS inside its next-generation battery systems and is expected to start road testing in 2022. This integration is also additive to Romeo Power’s sustainability efforts as it may enhance reuse and battery second life assessment.
Founded in 2016 and headquartered in Los Angeles, California, Romeo Power delivers electrification solutions for commercial vehicle applications.
TWAICE and pepper partner for full battery transparency in retrofitted commercial vehicles
TWAICE, a provider of predictive analytics software that optimizes the development and operation of lithium-ion batteries, and pepper motion GmbH (formerly…
TWAICE, a provider of predictive analytics software that optimizes the development and operation of lithium-ion batteries, and pepper motion GmbH (formerly etrofit), a company offering solutions for the electrification (retrofitting) of used and new commercial vehicles such as trucks in distribution transport, buses in local public transport (LPT) and municipal vehicles, are partnering for full battery transparency in retrofitted commercial vehicles.
TWAICE’s analytics software will make the battery performance and lifetime of electrified powertrains transparent and thus more sustainable. This provides pepper customers with battery insights and enables optimal operation.
Retrofitting can be an economical and sustainable alternative to diesel vehicles. pepper retrofits both buses and trucks with all-electric powertrains.
We plan to put around 1,200 buses and trucks on the road with our technology by 2023 alone. The vehicles will be delivered primarily in Europe, North and South America.—Andreas Hager, Managing Director of pepper motion GmbH
TWAICE will support pepper and commercial fleet operators in both the development and operation of the electric vehicles. The battery analytics software allows the condition of vehicle batteries to be estimated and predicted in the field, long-term battery performance to be analyzed, maintenance to be predicted, warranty commitments to be adjusted, and a realistic residual value to be determined. It can also provide drivers with targeted usage recommendations. In this way, the TWAICE software makes the service life and economic efficiency of the vehicle batteries transparent.
TWAICE is an important strategic technology partner for us. We can use the software not only to analyze the aging process of batteries, but also to derive value-linked different life cycles and usage scenarios that are valuable for our customers and our product development.—Dr. Ing. Matthias Kerler, Chief Technology Officer of pepper motion GmbH
The analytics data from TWAICE provides pepper with conclusions to further optimize the cycle stability of the batteries used, and to ensure maximum energy-efficient and economical use.
The technology behind the TWAICE predictive analytics software uses artificial intelligence to determine battery condition and predict the aging and performance of lithium-ion batteries.
Analog Devices. Earlier, TWAICE announced a collaboration with Analog Devices, Inc., a global semiconductor company and software solutions provider, with the aim of mastering the challenges of battery life-cycle optimization. The combination of state-of-the-art sensor technology and wireless connectivity from Analog Devices with battery analysis software from TWAICE will benefit customers in the mobility and energy sectors. The alliance will help to significantly reduce warranty risks and recalls, optimize battery life and increase the value of batteries, TWAICE said.
Analog Devices is a global leader in the development, manufacture and marketing of a broad portfolio of high-performance analog mixed-signal and digital signal processing solutions that are used in almost all types of electronic devices. The company is also the market leader in battery management solutions. The collaboration with the Munich software company TWAICE, whose software platform offers end-to-end battery analysis solutions, enables the entire battery life cycle to be optimized.
The aim of the cooperation is to provide a holistic life cycle solution for automobile manufacturers with integrated hardware and software. A complete end-to-end solution with state-of-the-art battery measurements via a wireless battery management system is offered.
Analog Devices’ sensor technology delivers data and data quality that was previously unavailable. TWAICE can deliver the critical battery performance insights for which automotive companies around the world are looking. The integration of sensor and communication solutions from Analog Devices creates an ideal database. The resulting prognoses enable qualified statements about their value and usability at any point in the life cycle of the battery.
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