This month has seen – at long last – Congressional passage of the bipartisan infrastructure bill (BIF), which is now just waiting the President’s signature. The bill’s passage marks an important political victory for President Biden and Congressional moderates, but more than that, it also brings the promise of Federal outlays to improve various physical infrastructure projects. These are likely to include roads and bridges, railways and waterways, the usual recipients of infrastructure largesse, but there’s a new player in town, too. Electric vehicle (EV) charging stations are likely to see infusions of Federal cash, with as much as $7.5 billion in the bill earmarked for this purpose.
The impetus will be two-fold. EVs are growing in market share, and the auto companies are aiming to increase their production 5- or 10-fold by the middle of the next decade. An EV expansion of that magnitude will require a heavy build-out of charging stations, to create a nationwide network. And the political will exists to support this organic growth. In his speech lauding the passage of the BIF, President Biden made clear that his administration will promote a nation-wide buildout of EV charge points.
Against this backdrop, we’ve opened up the TipRanks database to find the details on two EV charging companies. These are Buy-rated stocks and according to investment firm Needham, each of these stocks has at least 40% upside potential for the year ahead. Here are the details.
ChargePoint Holdings (CHPT)
We’ll start with ChargePoint, a major player in the US and European EV charging network operation universe. ChargePoint holds a leading position in the commercial and fleet segments, with over 5,000 customers, and its charging networks in North America and Europe include over 118,000 charging locations. Even more importantly, ChargePoint has more than 70% market share in the North American charging network, more than 7x its nearest competitor.
The $7.5 billion for EV charging stations contained in the bill is a major prize, and ChargePoint, with its dominant position in the current market, is certain to gain its share of the largesse.
ChargePoint has made several strategic moves in recent weeks, to maintain its leading position. The two most recent were in the European market, where ChargePoint acquired has·to·be, the provider of the cloud-based e-mobility EV charging software platform be.ENERGISED. The acquisition follows the August acquisition of ViriCiti, an eBus and commercial fleet charging company provider.
Early in September, ChargePoint released its financial results for Q2 of fiscal year 2022. The company’s top line came in at $56.1 million, for a 61% yoy gain. Almost $41 million of that total was due to networked charging fees; this was up an impressive 91% from the fiscal 2Q21. In two important guideposts for investors, ChargePoint reported over $618 million in liquid assets, and increased its full-year fiscal 2022 guidance to the $225 million to $235 million range, up 15% at the midpoint.
Needham analyst Vikram Bagri covers this stock, and is upbeat about its potential. He writes, “We expect the company’s recent acquisitions combined with its fast charging offering to drive additional growth by leveraging existing relationships and targeting the Fleet market. We believe CHPT’s superior software, excellent customer service, head-start over its peers, quality hardware and proven ability to innovate will allow the company to maintain its dominant position in the US.”
To this end, Bagri rates CHPT a Buy along with a $35 price target. This figure suggests room for ~38% gain in the coming year.
Turning to the TipRanks data, we’ve found that Wall Street’s analysts hold a range of views on CHPT. The stock has a Moderate Buy analyst consensus rating, based on 10 reviews, including 7 Buys, 2 Holds, and 1 Sell. Shares are currently priced at $25.53, and the $34 average price target implies a one-year upside of ~33%.
The second stock we’ll look at is a company that has taken a unique approach to the EV charging network niche. Volta builds out charging stations, and it does so in partnerships with property owners – but it combines its EV charge points with on-site video advertising. The charge stations include full-color video advertising screens, allowing Volta and its property partners a way to tap into a captive audience, and to monetize the space in the parking lots.
Volta’s network of charging stations has delivered over 100 million ‘electric miles’ to EV drivers across the nation, and in doing so has saved more than 3.9 million gallons of gasoline. The company also boasts that it has offset more than 44 million points of carbon dioxide emissions.
Volta is expanding that network, and early this month announced that it is boosting its existing partnership with Topgolf Entertainment. The enhanced partnership will bring additional Volta charging stations to locations in 10 states, in all regions of the nation.
Volta has already moved to secure its intellectual property, claiming two new patent issues during September. These include patent number 11,117,482, Charging Station with Articulating Panels, which covers the company’s insight of a charging station that gives video ads, and patent number 11,132,715, Systems and Methods for Providing Targeted Advertisements to a Charging Station for Electric Vehicles, that covers the video ad presentations.
Volta is new to the public markets, having started trading on August 27 after completion of a SPAC transaction with Tortoise Acquisition Corporation II. The transaction brought $400 million in gross proceeds to Volta.
Covering Volta for Needham, analyst Vikram Bagri sees a clear path forward for this company.
“Volta aspires to be a premium provider of charging stations at high traffic locations. We look for Volta to benefit not only from the rapid shift towards EVs through delivery of charging services at its stations, but also from a shift in consumer behavior, which will help the company stand out in a soon-to-be crowded market. We believe that Volta’s ability to identify and secure premium sites, generate multiple sources of revenue from its charging stations, and deliver a compelling use case to its site hosts all support our investment case,” Bagri opined.
To this end, Bagri rates VLTA shares a Buy, and his $15 price target implies an upside this coming year of ~40%.
Overall, it’s clear that the Street likes Volta. The company has 4 reviews on file and they are all positive, for a unanimous Strong Buy consensus rating. The shares are selling for $10.90 and their $14.13 average price target suggests a one-year upside of 29%.
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