There is a global push toward adoption of electric vehicles (EVs). However, this objective is unlikely to be achieved without proper EV charging infrastructure. EV charging stocks are, therefore, a key investment theme for the next decade. In the recent market meltdown, some of the best EV charging stocks have declined. I believe it’s a good long-term accumulation opportunity.
Taking about the market potential, U.S. President Joe Biden’s administration has set an ambitious target for EVs. By 2030, the administration is targeting 50% of vehicles sold to be electric. With this push, the administration has also allocated $7.5 billion toward EV charging infrastructure.
In Europe, the scenario is no different. As the region looks to reduce dependence on Russia for energy needs, the focus is on accelerating the adoption of EVs. Estimates suggest that Europe needs 65 million charging stations by 2035. This would require $134 billion in infrastructure investments.
Clearly, there is a big market opportunity in both the U.S. and Europe. There can be potential value-creator stocks from the EV charging segment in the next few years. Let’s talk about the four best EV charging stocks to buy to benefit from the big addressable market:
In May 2022, ChargePoint (NYSE:CHPT) stock traded at lows of $8.50. The stock has already surged by 64% from those levels to $13.90. However, I believe that the rally from oversold levels will sustain and CHPT stock is still undervalued.
ChargePoint already has a leading market position in North America. With acquisitions, the company has increased its presence to 16 European countries. Expansion in these two regions will help the company sustain robust growth.
From a revenue and margin perspective, ChargePoint derives revenue from hardware sales and software services. As the company’s charging infrastructure network expands, recurring revenue will boost margins and cash flows.
From a financial perspective, ChargePoint reported cash of $541 million as of April 2022. This provides ample flexibility to pursue aggressive network expansion. With favorable government positives, the company is positioned for accelerated top-line growth.
I would also include Blink Charging (NASDAQ:BLNK) among the best EV charging stocks. After a correction of 60% in the last 12 months, the stock seems worth considering.
Recently, the company announced the closure of the acquisition for SemaConnect. The acquisition will add 13,000 EV chargers and 3,800 site host locations in North America. It’s worth noting that in April 2022, Blink acquired EB Charging (U.K. focused) and added 1,150 EV chargers to the company’s network. Clearly, Blink Charging has been using acquisitions as a means of expansion in the U.S. and Europe.
Of course, Blink is still at an early growth stage. For 2022’s first quarter (Q1), the company reported revenue growth of 339% to $9.8 million. Stellar growth is likely to sustain considering the company’s aggressive acquisition strategy.
On the flip-side, Blink has cash and equivalents of $161.9 million as of Q1 2022. With cash burn, equity dilution might be on the cards. However, I believe that BLNK stock is already oversold. Gradual accumulation can be considered.
Wallbox (NYSE:WBX) stock is another attractive name among EV charging stocks. The company is on a high-growth trajectory, having reported revenue growth of 192% for Q1 2022 to 28.3 million euros.
It is also worth noting that Wallbox has been expanding global presence with products being sold in over 100 countries. With a big addressable market, I believe that the growth trajectory is likely to remain robust. New products will add to the growth momentum beyond 2022. For 2022, the company has guided for top-line growth in the range of 145% to 190%.
Considering the growth momentum, WBX stock looks attractive after a correction of 46% year-to-date. Another positive point to note is that for Q1 2022, the company reported a gross margin of 41.4%, which was ahead of the company’s guidance. With operating leverage, margin improvement is likely to sustain.
However, in the near-term, cash burn will continue. Wallbox has 158 million euros in cash to navigate the next few quarters.
The selloff in EVgo (NASDAQ:EVGO) stock has sustained with the stock trading near 52-week lows. It seems like a good time to consider some accumulation.
EVgo is present in 30 states with 850 DC fast-charging sites. The company also has 2,100 fast-charging stalls in operation or under construction as of Q1 2022. With a suite of offerings for a diverse customer base, EVgo looks attractive.
Just to put things into perspective, the company believes that it can clock a turnover of $2 billion when EV adoption in the U.S. reaches 5%. Further, the company has guided for adjusted EBITDA of $700 million at those levels of EV adoption.
Clearly, there is ample room for growth. For 2022, the company expects to report revenue of $48 to $55 million. The important point to note is that by the end of the year, EVgo expects to have 3,000 to 3,300 DC fast charging stalls operational or under construction. Therefore, the growth in 2023 and beyond is likely to be robust.
On the date of publication, Faisal Humayun 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.comPublishing Guidelines.
