As electric vehicle (EV) sales rise around the world, there will be a number of industries that directly benefit from the change in energy consumption. Electricity consumption could rise, millions of EV chargers will be needed, and there will be a huge demand for raw materials. 

These businesses adjacent to EV manufacturing have become appealing because EV stocks trade for incredibly high price-to-sales multiples, or multi-billion dollar valuations for pre-revenue companies. And if you're looking for stocks that will directly benefit from EV growth, we think SunPower (SPWR -2.12%), ChargePoint Holdings (CHPT -5.06%), and NextEra Energy (NEE -1.67%) will be some of the biggest beneficiaries. 

Person charging an electric vehicle outside.

Image source: Getty Images.

The complete energy solution

Travis Hoium (SunPower): Rooftop solar and electric vehicles aren't directly related, but they serve a similar customer base, and it's well known that EV owners are far more likely to have rooftop solar than the general population and vice versa. What SunPower is doing is trying to leverage its position in the energy industry to become a full energy services company, including charging of electric vehicles. 

SunPower's strategy starts with rooftop solar panels, but the addition of energy storage to the home energy system is really the key. Storage allows SunPower to control when a home or electric vehicle is pulling power from the grid, when power is coming from solar panels, and when energy is stored or discharged. This will allow a homeowner to choose to "fuel" their EV with only homemade solar electricity or even use the EV as an additional battery pack for backup power. 

Based on historic trends, if EV sales grow at the rate manufacturers and industry observers expect, we would expect to see a sharp rise in rooftop solar being installed as well. That will be a big tailwind for SunPower, and with the company moving into energy storage and complete smart home power solutions, this could be a growth stock for years to come. 

In need of infrastructure

Howard Smith (ChargePoint Holdings): There will be winners and losers among the growing number of electric vehicle manufacturers. Regardless of which vehicle supplier prospers from an EV boom, though, significantly more charging infrastructure will be needed. ChargePoint has a comprehensive network of offerings that includes more than 2,000 publicly available fast-charging stations. Also, with over 70% market share, it is the North American leader in Level 2 charging networks, which use 240-volt power. It expects sales of its charging ports to grow by seven times through 2026, as it expands in both the U.S. and Europe. 

ChargePoint charger being plugged into vehicle at home

Image source: ChargePoint Holdings.

Though the company came public through a special purpose acquisition company (SPAC), it's not a pre-revenue start-up. It reported sales of $146 million in its fiscal 2021, which ended Jan. 31. ChargePoint said it expects that to increase by 37% to $200 million at the midpoint of its fiscal 2022 guidance. 

That level of revenue still values the company at a very lofty 30 times sales. But it also gives management some credibility as it matches what the company presented prior to trading publicly. If those previous revenue estimates hold for calendar year 2022, the valuation drops to 18 on a price-to-sales basis. 

With a suite of products that caters to the needs of EV fleet owners, parking operators, and consumers, as well as corporations and municipalities, an EV boom gives ChargePoint the ability to accelerate growth to justify its valuation looking ahead several years. Growth in the sector looks imminent. Major automakers have set goals and timelines for becoming virtually all-electric. An added catalyst in the U.S. could come from infrastructure spending that President Biden has proposed to help install 500,000 new charging stations. 

The need for much more EV charging infrastructure is clearly coming, and ChargePoint is in a prime position to supply it. Investors just need to be patient and only allocate money that belongs in the high-risk portion of a portfolio. 

Leading the next-generation energy grid

Daniel Foelber (NextEra Energy): As North America's largest producer of wind and solar energy, NextEra is ready to support the EV boom by supplying the grid with clean energy. The environmental impact of widespread EV adoption paired with a nationwide charging network is reduced if the majority of electricity is derived from fossil fuels. This is where utilities can make a difference.

NextEra is certainly not the only utility that is investing in renewables, but it has arguably been the most aggressive. The company's renewable division, NextEra Energy Resources (NEER), finished 2020 with around 23.9 gigawatts (GW) of generation capacity. In its first-quarter conference call, NextEra reported that NEER now has a backlog of 15.25 GW, meaning plenty of new projects are in the works. 

NextEra has grown to become the largest U.S.-based utility by market cap. The secret sauce? An ability to harness its existing leading position in Florida -- through Florida Power and Light -- along with debt to fund new capacity. Although around 70% of FPL's power comes from natural gas, it has 2.64 GW of solar projects and expects to add 3.8 GW over the next four years. It also added 70 new EV charging ports in the first quarter of 2021, bringing its total to 400. It plans to install 600 more charging ports by 2022. 

The company's growth rate is impressive, but it has come at a hefty price. The past few years have seen stagnating revenue and net income -- along with a sharp rise in capital expenditures -- which has led to massive cash outflows on the investing side.

NEE Revenue (Annual) Chart

NEE Revenue (Annual) data by YCharts

Investors have welcomed this strategy, as NextEra outperformed the S&P 500 and the utility sector over the past three, five, and 10-year periods. Given the spending patterns of its competitors, NextEra is showing no signs of losing its lead over its peers. Many renewable operators have projects in the works, but none combine both the existing and planned capacity of NextEra Energy. 

Ride the EV tailwinds

Growth in electric vehicle sales could change a lot of the energy industry, and investors will want to make sure they're riding the tailwinds of the EV trend, not fighting them. These three stocks should do well as EV sales grow, and that's why they're top picks for us today.