Just like tech stocks, many electric vehicle (EV) stocks are on sale, following the January stock market sell-off. But while there may be opportunity with shares in several of the EV makers, and with some of the higher-profile EV infrastructure plays, you may want to add EVgo (NASDAQ:EVGO) stock to your watchlist as well.
An operator of DC Fast Charging, or DCFC, stations, it’s a major player in an important part of the charging industry. Not only that, it’s forming partnerships with some big name companies. Therefore, EVgo is well-positioned to both expand its operations, and see increased demand for its services, over the next few years.
With the latest market volatility, it’s fallen back again to single-digit prices. At around $8 per share, keep in mind a rebound may not be immediate. A further pullback could happen as well. The market could continue to remain cautious about EV plays.
Put simply, it may stay under-the-radar and unappreciated for now. Yet I wouldn’t say it’s going to be that way forever. Why? Let’s dive in, and find out.
The Latest With EVGO Stock
The market may be shying away from EVgo right now. But the company continues to plug along, making progress building out its network. For instance, it recently opened the first batch of charging stations located at Meijer grocery stores in Michigan and Ohio. In time, it plans to have 800 such stations in operation, across the many Midwestern states Meijer operates.
You may be thinking, building out infrastructure is one thing, yet demand is the other important piece of the pie. I agree fully. Fortunately, another recent development indicates the demand is there for EVgo’s service, and it is growing.
As InvestorPlace’s Larry Ramer wrote in his recent article on EVGO stock, registrations for the company’s charging information app, PlugShare, doubled in 2021, rising to over two million. The growth of PlugShare should put to rest the idea that this smaller EV charging is some sort “also ran” in the industry. Doomed to be muscled out by larger, deeper-pocketed competitors.
A lot still needs to play out here. And there’s always the chance that EVgo won’t deliver.
Still, based on its accomplishments so far, don’t discount its ability to deliver stunning results in the years ahead.
Why EVgo Could Live Up to Lofty Projections
As you may or may not know, EVGo went public via the special purpose acquisition company, or SPAC, route. Like other SPACs, when it announced its deal to become publicly-traded, via a merger with Climate Change Crisis Real Impact I Acquisition Corporation, the two companies presented a merger presentation. In this presentation, there are long-term financial projections.
Since “SPAC mania” ended about a year ago, investors now take the numbers from these presentations with a grain of salt. I don’t blame them. Many of the projections provided in these slide decks may be possible. But are they probable? That’s the question. Even so, in the case of EVGO stock, these numbers may be more than a stretch goal. In other words, they may be results the company may be able to achieve over the next few years.
For example, the presentation called for $596 million in annual revenue, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $193 million, by 2025. EVgo also plans to have 20% of the addressable U.S. charging market by this time. On the surface, this may sound too ambitious. Yet consider that the company is growing its charging network at a rapid pace.
Also, consider how the company is carving out a niche for itself, as a provider of fleet charging services. JPMorgan’s (NYSE:JPM) Bill Peterson cited EVgo’s focus on capturing a large share of the rental car and ride-share charging market, in his bullish research note issued on the stock back in December. Put simply, hitting these lofty projections may be within reach. Given that at today’s prices, EVgo has a market capitalization of just $544 million, it’s clear this stock could move substantially higher.
As it makes progress with its expansion, its revenue will take off in a big way.
The Bottom Line on EVGO Stock
Obviously, the big “payoff moment” for EVgo is years away. This, plus the possibility that EV stocks remain out of favor in the near-term, may mean this stock stays stuck at or near present prices.
EVGO stock currently earns a “C” rating in my Portfolio Grader.
Despite its big drop in recent months, in the short-term it could drift to even lower prices.
Yet over the long term?
Now that may be a whole different story. Ahead of its charging business getting into high gear, consider EVGO stock one to watch very closely.
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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