Evgo (NASDAQ:EVGO) appears on many lists of top EV stocks to invest in to take advantage of the EV boom. EVgo doesn’t make an electric vehicle, but its business could prove even more lucrative: EV charging stations. The company operates the nation’s largest public fast charging network, and it’s growing fast. Imagine investing in the largest gas station chain around 1920, and you have an idea of the growth potential for EVGO stock.
EVGO stock is up 20% so far this year. Is now the time to add this EV stock to your growth portfolio?
The Nation’s Largest Public EV Fast Charging Network
EVgo operates the country’s largest network of public fast chargers. There are other companies that offer much larger networks, but they have deployed mostly Level 2 chargers. These can take five to six hours for an EV to fully charge. EVgo is focused on deploying DC fast charging stations. These are capable of fully charging an EV in 15 to 45 minutes.
In its fourth quarter earnings, which were reported in March (resulting in a 9% pop in EVGO stock), the company noted it ended 2021 with 1,676 charge stalls in operation. Its network delivered 26.4 gigawatt-hours of power to EV owners during the year. The company added an additional 109,000 customer accounts in 2021.
Rapid Growth Accelerated by Key Deals With Auto Makers
EVgo has been rapidly growing its fast charging network. That effort is getting a boost from some high profile deals with auto makers. Playing catch-up in the race to sell EVs, traditional auto makers are signing deals to make EVgo a preferred charging option for customers — some offering free charging at EVgo chargers for one year.
Those partnerships are accelerating EVgo’s fast charger network expansion. In Q4, the company said its construction pipeline at the end of 2021 exceeded 3,100 new fast charging stalls.
Federal Government Spending Billions to Increase EV Charging Network
EV charging stocks — including EVGO stock — got a boost in February from President Joe Biden’s administration. A new plan called the National EV Infrastructure Formula Program was announced. It will see the government pump $5 billion into funding EV charging stations along the national highway system with individual states having the final say on which charge companies get the contracts. Expect EVgo to be on the receiving end of at least some of that spending.
EVgo isn’t just the nation’s largest public EV fast charging network, the company also claims to be the first to be powered by 100% renewable energy. That ticks off a big box when looking for government funding with an administration that has made zero-emissions and sustainability a key part of its agenda.
Risks to EVgo
No company is without risk. That can be even more of an issue for a company on the bleeding edge of a revolutionary change. The tide appears to be swinging toward EVs after years of niche status. Sky-high gasoline prices aren’t hurting that push, and it has considerable government backing. However, it’s always possible the EV transition might stall. EVs remain expensive compared to traditional gas-powered cars, and many potential buyers still have “range anxiety.” Rising prices for raw materials like nickel and lithium could drive EV prices even higher in the short term.
If the shift to EVs does indeed live up to the hype, that brings another challenge in the form of competition. There are already several other major charging network competitors, including several that offer far more charge stations than EVgo (they’re Level 2 stations, though). A larger market will intensify the competition to be the top player.
Finally, more users may opt to have a charger installed at their home when they buy an EV. This would reduce the need to use public charge stations.
Bottom Line on EVGO Stock
Despite what I said about risks to EVgo, the company is in a good place. It leads the nation in public fast chargers. It has signed high-profile deals to be the preferred EV charging network for several of the world’s largest auto makers as they roll out their new EVs. Those deals are helping the company expand its charging network even faster. In addition, the federal government is pushing to expand the national EV charging network and throwing billions of dollars into the effort. Some of that money is bound to end up as revenue for EVgo.
The investment analysts polled by the Wall Street Journal rate EVGO stock as “overweight” with an average $16.25 price target. This suggests a healthy 25% upside. EVGO also earns a “B” rating in Portfolio Grader. This stock is a solid bet on EV adoption and a good option for a portfolio focused on long-term growth.
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.
