The last 12 to 18 months have not been good for EV charging stocks. The bear market comes after a euphoric rally in 2020. Clearly, it’s been an extended period of downtrend from overbought levels. It finally seems that EV charging stocks are trading at attractive levels. Given the industry growth potential, it’s a good time to consider some of the top picks from the EV charging space.
In terms of the impending growth potential, the following numbers are worth noting. Electric vehicle charging points in the United States are likely to increase by nearly 10-fold to 35 million by 2030. Similarly, Europe would need at least 3.4 million public charging stations by 2030 from the current level of about 375,000. Therefore, the best part of growth is still to come for EV charging companies.
Even amidst increasing competition, the addressable market is significant to absorb multiple players. It’s also a good time to consider exposure to EV charging stocks, as operating leverage would translate into meaningful margin improvement.
Let’s discuss three EV charging stocks that are best positioned to benefit.
Blink Charging (BLNK)
Blink Charging (NASDAQ:BLNK) stock has slumped by 66% in the last 12 months. Current levels look attractive for accumulation. It’s worth noting that BLNK stock has a short interest of 24%, and I would not be surprised if there is a massive short-squeeze rally to come.
For Q1 2023, Blink reported revenue growth of 121% on a year-on-year basis to $21.7 million. During the quarter, the company deployed, contracted or sold 6,461 charging stations. With ample scope for penetration in U.S. and Europe, I expect stellar revenue growth to sustain.
At the same time, EBITDA margin improvement is likely on the back of operating leverage. Further, recurring subscription and service revenue increases will positively impact margins. The company’s gross profit improved in Q1 2023 by 186% year-on-year (YoY). I, therefore, don’t see current EBITDA level losses as a concern.
ChargePoint Holdings (CHPT)
ChargePoint Holdings (NYSE:CHPT) stock has also been in a correction mode in the last 12 months. However, the stock has trended higher by 10% in the last four weeks. In all probability, CHPT stock has bottomed out.
For Q1 2023, ChargePoint reported revenue of $130 million, which was higher by 56% YoY. There are two important points to note in the company’s results. First, subscription revenue was $26.4 million, which was higher by 49% on a YoY basis. With aggressive growth in the charging network, the company’s recurring revenue will continue to swell.
Further, for Q1 2023, ChargePoint reported a gross margin of 23%, which was higher by 800 basis points from the same point in 2022. I expect margin improvement to sustain as recurring revenue increases.
It’s also worth noting that ChargePoint is a leader in North America in terms of charging ports activated. The company has boosted its presence in 16 European countries. Therefore, the addressable market is significant, and the growth outlook is positive.
EVgo (NASDAQ:EVGO) stock has been sideways year-to-date (YTD). I believe that a rally from oversold levels is likely in the coming quarters.
EVgo claims to be the leader in public DC fast-charging network sites. Currently, the company has 3,100 DC fast-charging stalls in operation or under construction. Additionally, the company has a development pipeline of 3,500 charging stalls. This will likely translate into robust revenue growth in the coming 24 months.
The company is already on a high growth trajectory, with Q1 2023 revenue increasing by 229% YoY. While EBITDA losses have widened, I don’t see that as a concern with the company at an early growth stage.
With $163.8 million in cash and equivalents, the company has the financial flexibility to pursue aggressive expansion. However, considering the cash burn, I believe EVgo will dilute equity next year.
On the date of publication, Faisal Humayun did not hold (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.