Halfway through the final quarter of the year, ChargePoint Holdings (NASDAQ:CHPT) and CHPT stock are looking like momentum plays heading into 2022.
The electric vehicle (EV) charging network’s stock gained 24% in October, is up more than 7% in November as I write this a little more than halfway through the month, and assuming there are no surprises when it reports Q3 2021 results on Dec. 7, after the markets close, the final month of 2021 could also be a winner for shareholders.
CHPT Stock Is Reaching Its Stride
Since ChargePoint’s stock hit bottom in early October, it’s been almost straight up over the past seven weeks, gaining in five of seven five-day periods.
In late September, I suggested that investors shouldn’t be fooled by ChargePoint’s inability to gain ground in the markets. It was an excellent speculative buy in the low $20s. On Sep. 30, it dropped briefly into the teens before bottoming on Oct. 6, pennies below $18. It’s up 48% from its most recent bottom.
When I discussed ChargePoint in late October, I said the company was doing enough for its stock to head back to $35, where it traded as recently as June. It had just gotten a Buy rating from an analyst with a $29 target price. It’s now less than three bucks from the target.
President Biden signed the $1 trillion infrastructure bill into law on Nov. 15, putting into motion a whole slew of initiatives related to renewable energy and the future of transportation. For example, regarding ChargePoint, $7.5 billion is allocated to building an EV charging network from coast to coast. In addition, part of $5 billion is dedicated to funding the mass adoption of zero-emission vehicles.
InvestorPlace’s Bret Kenwell recently suggested that CHPT has a chance of adding 50% more to its share price soon — possibly reaching as high as $36.86, above my $35 price prediction.
However, it was one sentence from Kenwell that caught my attention.
“For CHPT stock, it would be foolish to sacrifice tomorrow’s growth for today’s bottom line as the EV market feels like it’s finally hitting a major tipping point,” Kenwell wrote on Nov. 16.
As I finished my article in October, “[A]ssuming the world doesn’t do a 180-degree turn and abandon clean energy, the stock will get back to $35 sometime in 2022.”
Not only is CHPT stock hitting its stride, but so too is the EV industry as a whole. It might be crazy to think that Rivian (NASDAQ:RIVN), a company with no revenue, is valued at $124 billion, 50% higher than Ford (NYSE:F), a company that knows a thing or two about building electric vehicles.
However, it’s also indicative of where investors see the world going.
The Electrification of Transportation
Far better to buy RIVN stock, which ultimately might self-destruct, than to miss out on the electrification of transportation. The same theory applies to ChargePoint.
While the odds look to be getting better for the company’s ultimate success and profitability, it remains a stock that is incredibly volatile and not for the faint of heart.
“ChargePoint remains a stock that risk-averse investors should not touch. That’s because, although ChargePoint has a good business, much can change when it comes to charging technology and EVs,” I wrote in October.
As my colleague said, CHPT blows hot or cold. So only diamond hands need to apply.
However, there is no question that the electrification of transportation is here. A decade from now, people will laugh about the investor reluctance toward electric in the early 2020s.
One company that could be leading the charge is ChargePoint. It has a front seat to the drama. While it still has to execute, the reality is, it’s got a massive head start. Except for Tesla (NASDAQ:TSLA), ChargePoint could be the next-best U.S. proxy for the electrification of transportation.
Until someone else proves that it is the 800-pound gorilla, ChargePoint’s so-called excessive valuation is justified in the opinion of some analysts. That is why the 16 analysts covering CHPT stock give it an Overweight rating and an average target price of $32.27.
I continue to like CHPT as a speculative buy. I look for it to close out 2021 in style by crossing into the $30s. We’ll see if I’m right soon enough.
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