One of the biggest trends over the past several years has been the rise of electric vehicles (EVs). As an investor interested in the rapid growth of that market, I’ve found plenty of EV companies to choose from. Many are startups and others are established automakers, but names from both categories will eventually fall by the wayside. Because of that risk, you should consider Chargepoint (NYSE:CHPT) instead. This company is the world’s largest EV charging network. Some electric vehicle stocks are going to do far better than others during the transition to electric, but CHPT stock is a play on the one thing we can be certain of: the need for more EV charging infrastructure.
Don’t just take my word for it, though. To be sure, Chargepoint is already seeing impressive growth. In its last quarter, the company reported a record number of new customers, along with 24% year-over-year (YOY) revenue growth. Chargepoint also issued optimistic guidance for the current quarter. Plus, the company has plenty of cash on hand to fund the expansion of its network — $609.8 million to be exact.
So, here’s what you should know about CHPT stock moving forward.
CHPT Stock: Range Anxiety and Cost Are Key Concerns
There are several issues with EVs that make the case for Chargepoint, but one of the major ones is pricing. Cost has been a problem for consumers shopping for EVs. In 2019, the average cost of a new gas-powered car in the U.S. was $36,000 compared to $55,600 for an EV.
True, government subsidies help close that gap. Additionally, the lower maintenance cost for electric vehicles further narrows it, especially for owners who keep their cars for more than a few years. Then there’s the lower price of electricity versus gasoline. Still, it’s an ongoing issue.
Maybe even more important of a concern, however, are the batteries in EVs. Specifically, consumers are worried about how far they can drive before needing to charge. What causes this “range anxiety” among drivers? Battery capacity is one issue, but the overriding concern is the lack of EV charging stations.
Range anxiety is something EV makers have to work hard to overcome, but it’s good news for CHPT stock.
What It Takes to Become as Ubiquitous as Gas Stations
Car owners may grumble about gas mileage, but nobody worries about taking a day trip and running out of gas. There are currently over 150,000 gas stations across the U.S. and most have multiple pumps. That means it takes just minutes to fully gas up. Green Car Reports did the math and calculated that a gas station with 12 pumps can fuel up to 1,700 vehicles a day.
So, gas stations are plentiful. They are spread across the country (not just in urban centers) and each pump can send a car on its way, fully fueled, in about 10 minutes.
Compare that to the current state of EV charging stations. As of Q1 2020, the National Renewable Energy Laboratory (NREL) reported 28,122 private and public charging stations in the country. Additionally, charging an EV takes much longer than fueling a traditional car. A Level 3 high-speed charger adds about 250 miles of range per hour. In other words, even if many drivers stick around for just a partial charge, a 12-charger Level 3 EV charging station is only going to be able to serve several hundred vehicles a day at best.
So, today there are relatively few public EV charging stations, they tend to be concentrated in large urban centers and drivers often have to park and wait their turn.
EV Manufacturer-Built Charge Stations Are Not a Long-Term Solution
Of course, charging networks built by EV manufacturers themselves were a necessary evil to overcome the chicken and egg problem with EVs — that initial lack of charging facilities. But these kinds of stations are not a sustainable business model for EV makers, especially now that there are so many different EVs available from so many different companies.
That’s where Chargepoint and CHPT stock come in. This is the company that is angling to be the modern equivalent of a gas station. Plus, the company extends that business model to providing charging stations for existing facilities like stores. Chargepoint doesn’t build the store, but it installs and maintains the onsite EV chargers. It also sells home EV charging solutions, including options for apartment buildings. Finally, CHPT is even inking special deals with EV manufacturers, offering buyers discounts to use Chargepoint services.
With such a huge gap in charging infrastructure even as EV sales are ramping up, Chargepoint is clearly in a good position to leverage its leadership into rapid growth — and experience decades of ongoing revenue as a result.
Bottom Line on CHPT Stock
Chargepoint shares currently have a “B” rating in Portfolio Grader. According to The Wall Street Journal, seven investment analysts give CHPT stock a consensus “Buy” rating. Their average 12-month price target is $38.86, representing a tidy 34% upside. Even at that price target, CHPT stock is well below its 2021 high close of $44.50 back in January.
The bottom line? There are plenty of options to choose from if you want to add EV stocks to your portfolio. However, going with Chargepoint — a company focused on the industry’s Achilles’ heel — lets you take advantage of the rapid growth in EVs without the risk of picking an EV name that will get left behind.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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