EV charging stocks are among the best bets right now due to the surging electric vehicle sales and substantial future potential for growth. According to the National Renewable Energy Laboratory, “…by 2030, EVs could account for 30–42 million light-duty vehicles on the road.” They estimated that “…to support a mid-adoption scenario of 33 million EVs on the road by 2030, the nation will need 28 million charging ports.” This aligns with an estimate by S&P Global Mobility, which believes “…the United States will need to quadruple the number of EV chargers between 2022 and 2025 and grow more than eight-fold by 2030, even taking home charging into account…”
Plus, this is just the U.S. There is a massive market for EVs in Europe, China and elsewhere. Many developing countries are especially behind regarding EV charging, and significant investments would be required to keep up with rising EV sales.
With that in mind, let’s look at three EV charging stocks to buy before the infrastructure shortfall becomes obvious:
ChargePoint (CHPT)
ChargePoint (NYSE:CHPT) is undoubtedly the leader among EV charging stocks. The company has a market share of around 43%, which implies substantial long-term opportunity. The EV charging market is estimated to grow at a CAGR of 30% through the forecast period of 2021-2028 and reach $112 billion in valuation. Accordingly, ChargePoint has seen 59% year-over-year revenue growth in its recent quarter, and analysts expect that to more than double by 2026, with the company just $30 million from breakeven.
Thus, even if the company is successful in retaining half of its market share, there is still significant potential for appreciation in the coming years. The average Wall Street analyst price target is at $15.6, implying 94% upside potential. Even the lowest price target of $10 implies a healthy 25% upside potential.
EVgo (EVGO)
EVgo (NASDAQ:EVGO) is a U.S.-centered play on the EV market. It is also among the biggest EV charging stocks, but there are some differences here. First, EVgo only offers DC fast charging, using 100% renewable energy for its services. That should cater to a more environmentally conscious customer base. It does have fewer charging locations than ChargePoint, but each location has more chargers.
Unlike CHPT, EVGO has seen very positive momentum recently. The stock is up 24% in the past month, and the average analyst price target still implies a 53.4% upside potential. The 5-year forward revenue growth average sits at 125.12% YOY. In exchange, we’re looking at five times sales, which is very reasonable.
Regardless, this is below ChargePoint due to its U.S.-centric nature. While ChargePoint is likely to thrive in places like Europe, Asia, Oceania, and even some parts of Africa in the future, EVGO will have to fight tooth-and-nail with Tesla (NASDAQ:TSLA) for more market share. Tesla simply dominates the U.S. EV sector, and I don’t see it changing anytime soon. However, I still believe EVgo can carve out a niche here.
Beam Global (BEEM)
Speaking of Tesla, I believe putting it on any EV charging stocks list is a no-brainer. However, since we’re talking about August specifically, Beam Global (NASDAQ:BEEM) is objectively a better buy due to its significant upside potential and its margin of safety. I expect it to outperform Tesla this month.
But of course, let’s talk about beyond that. Beam Global has off-grid EV charging stations and other energy offerings, such as storage and security. It is a very small player, and there is rightfully a lot of speculation baked into the stock—but I see it having success for a few reasons.
For starters, it has recently expanded into Europe, and that should provide more room for growth without going head-to-head against Tesla. Moreover, the company has negligible debt, and analysts expect it to turn profitable as early as next year. With the expected profit, the price-to-earnings ratio would be slightly below 9 times two years from now if the stock price stayed the same—that too with nearly 31% revenue growth. Thus, I see a substantial upside from here. The average Wall Street analyst has a price target of $26.5, implying a 155% upside.
On the date of publication, Omor Ibne Ehsan 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.
