When the calendar finally turns to 2021, 2020 will be remembered for plenty of things, but in financial markets, one of the things investors will remember most is the emergence of the electric vehicle. The investment theme is evolving beyond Tesla (NASDAQ:TSLA), the group’s juggernaut. And that evolution is giving rise to a variety of EV charging station stocks.
Enthusiasm for EV charging station stocks makes sense. One way of looking at these venues is that they are next generation gas stations and that infrastructure is essential to weaning drivers off internal combustion engines (ICEs).
In plain English, charging station equities are derivative plays on the EV boom and that’s just fine because market history is loaded with examples of derivative companies benefiting from seismic trends. Think makers of components for smartphones or the real estate companies that own data centers as just two modern examples.
Specific to charging station operators, there’s an interesting circular situation to consider. The U.S. has a deep-rooted driving culture and Americans love to drive. Likewise, many car buyers aren’t saying they explicitly prefer ICE products over EV equivalents. Rather, they express concern about time in between charges and where they can charge up when away from home.
That speaks to opportunity with EV charging station stocks. Here are a few to consider:
Switchback Energy (SBE)
For those that aren’t familiar with this name, Switchback Energy is the special purpose acquisition company (SPAC) serving as the vehicle for ChargePoint to eventually become a publicly traded company. The target in this transaction operates the largest network of charging stations in Europe and North America, making it one of the more credible additions to EV investment roster.
There are several things to like with SBE stock and enough to consider establishing a position in the blank-check firm before it officially becomes ChargePoint. Beyond the obvious catalyst of the company’s sheer heft, ChargePoint runs efficient business that features an asset-light model, meaning its fixed costs are relatively low.
Indeed, ChargePoint operates in an emerging growth industry, but the company itself is mature at 13 years old. And, it is financially sturdy enough to the point that doesn’t need the cash infusion it’s getting from the Switchback merger.
Bottom line with SBE stock is that while the broader EV industry may be in a bubble, this company doesn’t sell cars, somewhat keeping it away from the bubble conversation while positioning it to benefit from long-term EV adoption.
Blink Charging (BLNK)
Like Chargepoint, Blink Charging is a mature company. In fact, it’s older, having been around since 1998. Blink operates a large network of charging stations across the U.S., many of which are found in practical locations, such as airports and hotels. This enables EV drivers to charge up while in their rooms or waiting on flights.
There are dueling views on BLNK stock at the moment. It’s hard to ignore a 1,364.52% year-to-date gain. But some market observers believe the company is cruising toward a dilutive secondary share offering and that the stock is worth significantly less than the $27 area at which closed on Dec. 11.
It remains to be seen whether bulls or bears are ultimately vindicated on Blink, but the company isn’t leaving the situation to chance. Blink recently introduced a pole mounting kit for the company’s IQ 200 EV charging stations. CEO Michael Farkas called pole mounting product “a game-changer to realize significant growth in 2021.”
That could be possible, but Blink’s upside potential largely revolves around bolstering revenue and staving off competitive threats because this is a narrow moat company.
Newborn Acquisition (NBAC)
Newborn Acquisition is another EV SPAC and its merger target is EV charging station play Nuvve. A Chinese blank-check company, Newborn previously said its looking to focus its business in either its home country or the U.S.
On the surface, Nuvve looks like it will be a direct competitor to the aforementioned Chargepoint and Blink, but it’s not and the differentiation could make NBAC stock relevant to investors. Nuvve doesn’t operate charging stations. Rather, its area of emphasis is vehicle-to-grid (V2G) solutions, which take excess electricity from an EV and feed it back onto the power grid. This means there is less strain on the grid while creating environmental benefits in the process.
There’s opportunity for Nuvve as more countries and states (see California) rollout ambitious clean energy agendas that put near-term strain on power grids (see California, summer 2020).
A leader in the V2G space, Nuvve is working on pilot programs in Europe. There is potential that it could announce a similar endeavor in California, perhaps providing a catalyst for the stock, which is off 33.38% from its previous high.
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Todd Shriber has been an InvestorPlace contributor since 2014.
