ChargePoint (NYSE:CHPT) should interest investors looking to gain exposure to the electric vehicle (EV) markets. Why? Because ChargePoint stock could be the safest investment in the EV space. Investing in the company allows you to participate in the secular EV trend without having to pick a “winner” from the various EV manufacturers.
ChargePoint recently became the first publicly traded EV charging network after it completed a $2.4 billion SPAC deal. The company operates the largest network of charging stations in the United States. If that sounds interesting so far, then an investment in ChargePoint stock might be suitable for your portfolio.
After a massive rally when the deal was announced, the stock has now been consolidating between $35 and $45. In particular, $50 is proving to be a strong resistance level — ChargePoint stock hit close to this level intraday in December and shortly fell to $35 afterward.
Now it’s at the $30 level, which I believe is a good entry point for long-term investors. And if it continues to fall, I would be happy to pick up additional shares and dollar-cost average. This company has tremendous growth potential for the long run.
A Closer Look at ChargePoint Stock
The EV industry is getting increasingly crowded, with various manufacturers battling for market share. This is exactly what makes ChargePoint so attractive, the company is poised to make money no matter which manufacturer becomes the dominant player. So, ChargePoint’s growth is proportional to EV penetration.
To that end, ChargePoint is beginning to ramp up for exponential growth. The company is projecting a 60% compound annual growth rate (CAGR) for the next seven years, predicting that revenues will surpass $2 billion by 2027.
That’s quite an aggressive forecast. However, given the size of the opportunity, it’s entirely possible. A report by Allied Market Research estimated that the global EV industry will reach $802.8 billion in the same seven-year period.
On top of that, the EV charging station market is expected to grow even faster. According to a report by Grand View Research, the U.S. charging market could grow at a CAGR of 38.9% from now to 2028. This market is expected to reach $10.8 billion by 2028. The U.S. government is aiding the growth of the EV charging stations market by investing in charging infrastructure and providing a whole host of incentives and subsidies.
Government action can be seen at both the State and Federal levels. In California, the Clean Transportation Program is helping facilitate the transition to EV by investing in charging technology and infrastructure. At the Federal level, the Biden administration is pushing through with a $2 trillion infrastructure plan targeted to fight climate change. The infrastructure plan will be a huge tailwind for the EV charging stations market as this is a critical component toward the transition to EV.
The other advantage ChargePoint has is with economies of scale. Simply put the more charging stations ChargePoint has, the more it can limit competition in a given geographical area. So it is incredibly important for the company to grow its infrastructure as quickly as possible to stifle competition and prevent new entrants. The company operates an “as a Service” model allowing site owners to quickly set-up a charging station with minimal upfront capital expenditures.
ChargePoint also has the advantage over other EV charging station companies in that it has been operating since 2007 and thus has a head start. The company has the largest network of charging stations in the U.S., seven times larger than its closest pure-play competitor, Blink (NASDAQ:BLNK). The company currently services more than 4,000 customers, including 60% of Fortune 50 companies. The company is targeting to deploy 2.5 million charging stations by 2025, further strengthening its competitive advantage.
The Takeaway on ChargePoint
ChargePoint stock is one of the best stocks to buy to take advantage of the exponential growth of the EV market. ChargePoint should do well no matter who wins the “battle for the EV market.” All EV manufacturers will need EV charging infrastructure and ChargePoint is the dominant player in this field.
I believe the current weakness is an opportunity to accumulate shares in the company.
On the date of publication, Joseph Nograles did not have (either directly or indirectly) any positions in the securities mentioned in this article.