With electric vehicles booming in Europe and the EU looking poised to take steps to subsidize the launch of more EV chargers, TPG Pace Beneficial Financial Corp (NYSE:TPGY) stock is worth buying at this point.
TPG Pace is slated to merge with EVBox, which deploys EV chargers and is the leading EV charging company in Europe.
Also making TPGY stock quite attractive is its very low valuation compared with other EV charging companies.
EVBox has the largest installed base of EV charging stations in Europe according to CleanTechnica. The company does not yet have many chargers in North America, but it plans to use the proceeds from its merger with TPG Pace to expand its charger base on the continent.
The penalties enacted on EU carmakers who don’t make a fast transition to electric vehicles has sped the process, according to a story on MetalMiner.
Given the EU’s rapid transition toward EVs, EVBox’s big presence there is certainly positive for TPG stock.
A Closer Look at TPGY Stock
Despite the EU government’s Herculean efforts to push automakers to sell more EVs, it appears that the bloc is not installing enough EV chargers to meet its carbon reduction goals.
Specifically, EU auditors found that the bloc, which had 250,000 charging stations last September, was far from meeting its goal of having 1 million chargers by 2025. As the bloc scrambles to meet the target, it’s likely to step up its subsidies to EVBox and its peers, giving their finances a big boost.
Last November, EVBox reported that nearly 40% of EU worry there won’t be enough charging stations indicating that the EU does not have enough public chargers to support its current EV users. The report also indicated that 43% of current EV owners would pay a fee for faster charging.
Valuation and the Bottom Line on TPG Stock
InvestorPlace contributor Mark Hake estimated the pro forma market for TPGY stock at about $2.8 billion.
Hake added that its competitor Chargepoint (NYSE:CHPT) was trading at more than double the price-sales ratio of EVBox. He estimated that TPGY stock was changing hands for 15 times EVBox’s own 2021 revenue forecast.
Meanwhile, Blink Charging (NASDAQ:BLNK), another one of EVBox’s peers, is trading for nearly 100 times analysts’ average 2021 revenue estimate.
Chargepoint has over 132,000 places to charge within its network in North America and Europe, and about 100,000 of them are in the U.S. Meanwhile, most of Blink’s EV chargers appear to be in the U.S. as well, so those firms’ European presence is not nearly on par with that of EVBox, which is the dominant European player.
I think that the Biden administration’s stimulus plan could greatly boost both U.S. EV adoption rates and subsidize the deployment of thousands of EV chargers in the U.S.
It’s possible, however, that parts of the stimulus package, including the provisions related to EVs and EV charging, may not survive the negotiating process in Congress. Further, there’s no doubt that the EU is still way more committed to supporting EVs than the U.S. and much further ahead in the process of switching to EVs.
So there’s no question that EVBox, the leading European EV charging company which is trading at a much lower valuation than Chargepoint and Blink, is much more attractive than the latter two names.
Meanwhile, given the EU’s big EV push and its goal of deploying one million EV chargers within several years, it is quite likely to heavily incentivize EVBox to build more EV chargers in the bloc.
Of course, EVBox will benefit a great deal from the very rapid adoption of EVs in the EU. In light of all of these points, I think that TPG stock is worth buying at this point for long-term, growth investors.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Larry Ramer has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.