One of the best ways to play the red-hot electric vehicle (EV) market may be through the companies that power EVs. After all, gas prices have been rising steadily for weeks and just hit a high point for the year. When fuel costs increase, more and more consumers make the switch to driving EVs.
Indeed, 2023 has been a great year for EV adoption, as companies have increased production and watched sales stack up. But while individual automakers see demand rise and fall, the need for EV charging infrastructure is only increasing. TD Cowen has flagged ChargePoint (NYSE:CHPT) as a particular leader in this space — and a likely winner of the EV boom.
True, CHPT stock is still recovering from a difficult start to the year. Shares are down significantly for the past six months. But TD Cowen is focused on the future — and it believes ChargePoint is on track toward a highly profitable one.
What’s Happening With CHPT Stock?
As noted, CHPT stock has been struggling lately and this analyst take hasn’t pushed it up yet. As of this writing, shares are in the green by less than 1% amid some volatility. This can likely be attributed to market conditions, as ChargePoint hasn’t reported any bad news of late. If TD Cowen is correct, though, the company’s outlook could be about to improve as demand for charging services spikes.
TD Cowen analysts have conducted a detailed analysis with a definitive conclusion: The amount of EVs in the U.S. is expanding rapidly. As a result, “the number of public charging ports in the U.S. must grow to 1.7 million by 2030 to keep pace with a growing EV fleet.” According to their findings, this type of “massive and rapid” expansion would require a government investment of $104 billion. This could create significant opportunities for the recipients of these funds to profit significantly and expand their market share.
While ChargePoint isn’t the only EV charging stock, it is the firm that TD Cowen sees as having the most growth potential. The firm maintains a highly bullish price target of $11 on the stock and an “outperform” rating. That prediction represents 95% upside for CHPT, which currently trades around $5.30 per share.
TD Cowen notes about ChargePoint:
“Minimal capex is required in the ChargePoint business model as the company relies on its commercial, hospitality, parking, fleet, and other customers to effectively crowdfund the buildout of EV-charging infrastructure […] This capital-light plan also attaches software to every charging station sold with a nearly ~100% attach rate, offering the company strong visibility into recurring revenue streams.”
TD Cowen cites ChargePoint’s high-quality hardware and subscription-based business model as key reasons for its bullish stance on the company. The firm isn’t the only one who sees CHPT stock as a winner, either. A consensus of 13 Wall Street analysts rates shares as a strong buy.
Why It Matters
While TD Cowen holds ChargePoint as its top pick for EV charging stocks, analysts at the firm have also praised EVgo (NASDAQ:EVGO). TD sees this smaller-cap company as having “underappreciated operating leverage” which investors shouldn’t disregard.
Like CHPT stock, EVGO has struggled recently amid difficult market conditions. But if TD Cowen’s predictions are correct, both companies could be destined for a turnaround as the need for EV charging investment becomes too great to ignore.
On the date of publication, Samuel O’Brient 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.
