In the past two months, ChargePoint (NYSE:CHPT) has made two European acquisitions valued at a total of 325 million euros ($380.7 million). Unfortunately, neither has moved CHPT stock back into the mid-$30s, where it traded for the first two months of the year.
I believe investors will ultimately benefit from the company’s strategic plan. However, patience is required at this point because there remain skeptics.
Here’s why you should ignore the doubting Thomases.
Analysts Like CHPT Stock
Eight analysts cover the company’s stock. Seven have it as a buy with one rating it a hold. None have it as a sell. The median target price is $39, with a high and low target of $46 and $24, respectively.
Think about those numbers for a second. The analyst giving it a hold has a $24 target price. That provides more than 10% upside for the most pessimistic viewpoint.
Now, analyst ratings are like trade rumors in sports. They’re a dime a dozen. So, I wouldn’t invest on their word alone. Instead, I would consider the key points of ChargePoint’s strategic plan. It is there you will gain the confidence to make a speculative bet on the EV charging network.
The 2 Acquisitions
The former acquisition is has-to-be, a leading European charging software platform backed by Volkswagen (OTCMKTS:VWAGY). VW was an early investor in has-to-be. It expects the combination to be a winning formula in the adoption of e-mobility.
“As an established leader in North America, our continued investment in Europe is critical to our stated growth strategy. We’re excited to announce our agreement to acquire has·to·be, a leader in its own right with a talented team, an impressive base of customers committed to e-mobility and robust technology,” CEO Pasquale Romano said in ChargePoint’s July 20 press release. “Our combined assets should position us to accelerate our leadership as electrification continues to take hold across continents.”
To be an early winner in the EV charging game, it’s imperative that ChargePoint capture market share on both continents. In many ways, Europe is more important than North America because the Europeans are far more supportive of the whole electrification of transportation.
What’s the Frank Sinatra line from the song “New York, New York?” It goes, “If I can make it there, I’ll make it practically anywhere.” Replace New York with Europe, and I think you get what I mean.
The latter acquisition is ViriCiti, a provider of electrification solutions for eBus and commercial fleets. I believe that the early money to be made is in commercial fleets, not personal vehicles. ChargePoint clearly feels the same.
“The future of fleets is electric, and integrating charging solutions with the many business systems already in place in today’s depots is essential to successful electrification,” Romano said on Aug. 11. “Adding ViriCiti’s vehicle management capabilities to our fleet portfolio allows ChargePoint to deliver more functionality to eBus and commercial fleet operators.”
Here in the U.S., ViriCiti’s clients include the MTA (Metropolitan Transit Authority), the transportation network for New York City’s buses, subways, trains, bridges, tunnels, etc. Other agencies using its solutions include the Toronto Transit Commission in my old hometown, the Chicago Transit Authority, and Berliner Verkehrsbetriebe, Berlin’s transit authority.
For an outlay of just $381 million – part of the payment for has-to-be in stock – ChargePoint gets 175 talented employees dedicated to accelerating its electrification plans. It’s hard to price the tech value and human capital value gained by these acquisitions.
The Bottom Line
ChargePoint’s argument on why you should invest in the company boils down to the fact that it provides the hardware and software to drive the electrification of mobility infrastructure for commercial and residential customers around the world.
A market estimated to reach more than $60 billion by 2030 and $192 billion a decade later.
The bipartisan infrastructure bill will eventually get through congress. Whether you are a Democrat or a Republican, it’s impossible not to appreciate how important the bill is to America’s future. A future that is more environmentally friendly.
If you’re a speculative investor, anything less than $25 should be a good entry point for long-term gains. On the other hand, if you can get some under $20, you absolutely should.
ChargePoint has a plan. The latest acquisitions clearly demonstrate where it’s headed. At some point, CHPT stock will hop on board.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.