The many pundits who prognosticated that electric vehicle sales would tumble in the U.S. alongside EV charging stocks, appear to have been, in line with my previous predictions, very much mistaken. That’s because, last quarter, the number of EV sales jumped 11.3% versus the same period a year earlier to a record total of 330,463, according to Cox Automotive, which cited data from Kelley Blue Book.
Moreover, the number of EVs handed over jumped 23% compared with Q1. As reasons for the surge, Cox cited “improved availability, higher discounts, and elevated levels of leasing.” Those all sound like legitimate, positive catalysts. I would add, however, one more important, positive catalyst to the list; it appears to me that the U.S. media in the last several months has become much less forcefully negative on EVs than it was last year.
Specifically, since last spring, I no longer see many stories in the mainstream media proclaiming how EV sales are tumbling and suggesting that the demand for vehicles in the U.S. will likely sink tremendously going forward. Here are three EV charging stocks to buy on weakness to exploit the rejuvenation of the U.S. EV sector.
EVgo (EVGO)
Investment bank Benchmark recently raised its price target on EVgo (NASDAQ:EVGO) stock to $5 from $3. As reasons for the increase, Benchmark cited more bullish market sentiment towards the name and the strong growth of the utilization of the company’s chargers.
On the momentum front, EVGO stock has doubled over the last three months, although it’s still down 15% in the last year And in the first quarter, the average throughput of its network came in at 53 gigawatt-hours, up from just 18 gigawatt-hours during the same period a year earlier.
Importantly, rideshare drivers are greatly increasing their utilization of EVgo’s network. Indeed, in Q1, these drivers bought 24% of the electricity supplied by EVgo, up from just 11% in Q1 of 2023.
“As more rideshare drivers transition to driving electric, the amount of electricity dispensed to this group of customers is expected to increase,” EVgo stated.
Both Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) are encouraging their drivers to shift to EVs, while EVs are much cheaper to operate than gasoline-powered vehicles. As a result, I expect many rideshare drivers to shift to EVs over the long term.
And of course, rideshare drivers drive many miles per day, so they will probably have to often recharge their vehicles on the road. Given these points, along with EVgo’s rising popularity among rideshare drivers, I expect the company’s financial results to get a big boost from their transition to EVs, and I view EVgo as one of the best EV charging stocks to buy.
ChargePoint (CHPT)
On June 18, ChargePoint (NYSE:CHPT)announced a deal with the huge South Korean battery maker, LG Energy. Under the deal, LG will utilize ChargePoint’s charger management software in its own EV charging products in America.
Given LG Energy’s huge size (its revenue last year was roughly $23.7 billion, based on current exchange rates) and the high margins that the deal is likely to carry, I believe that this pact is likely to meaningfully boost ChargePoint’s financial results over the longer term. Moreover, ChargePoint could very well sign similar deals with other, major companies looking to enter the rapidly growing EV charger market.
Furthermore, ChargePoint recently reported that it and its partners had been selected by states to receive $75 million of subsidies for the construction of almost 600 charging points in 20 states. Within the next two or three years, the launch of these charging points should also meaningfully boost the company’s financial results.
Also encouragingly, ChargePoint expects to generate positive EBITDA, excluding certain items, in its fiscal Q4 which ends in January 2025.
In light of the latter point and the company’s strong, positive catalysts, I view ChargePoint as one of the top EV charging stocks.
Wallbox (WBX)
EV charger maker Wallbox (NYSE:WBX) has huge exposure to Europe, where EVs had a large 14% overall market share as of May. In Q1, Europe accounted for 85% of Wallbox’s revenue.
The company’s Pulsar Pro EV charger greatly reduces the costs that sizeable companies must pay to electrify their fleets. That’s because the product’s “power sharing feature…monitors the building’s power and automatically allocates power to connected EVs, reducing the need for costly upfront electrical infrastructure upgrades,” Wallbox Corporate Development & IR executive Michael Wilhelm explained during the company’s Q1 earnings call.
The company has a number of very impressive customers, including Spanish renewable energy giant Iberdrola, which generated $49 billion of revenue last year, the state of Washington, and Osprey, which is building a major EV charging network in the UK.
Wallbox expects to have come close to generating positive EBITDA, excluding certain items, in Q2, and its gross margin came in at a very high 39.6% in Q1.
On the date of publication, Larry Ramer held a long position in EVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
