Please ensure Javascript is enabled for purposes of website accessibility

Forget Dogecoin -- This Stock Is a Better Buy

By Howard Smith - Updated May 7, 2021 at 3:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors looking for a home run investment might have better odds with a player in the electric vehicle sector.

It's probably a safe bet to say that many of the buyers of Dogecoin (DOGE 2.00%) did so because they are hoping the meme cryptocurrency will go "to the moon." But it's hard to make a real investment case for something that jumps -- or drops -- 26% in value in the course of a day's trading just because Elon Musk or Mark Cuban mentions it in a tweet.  

Investors looking for a moonshot investment would be better served to take a flier on a company in a sector that promises to create a fundamental shift in an existing industry. Electric vehicle (EV) sales are expected to jump from 1.7 million in 2020 to 8.5 million just by 2025, and to 26 million 10 years from now, according to industry research provider BloombergNEF. And the firm expects EV sales to more than double again in the following 10 years.

Charging station network leader ChargePoint Holdings (CHPT 2.20%) is established in the business, and investors in this company could ride the explosive EV growth trend.

Transparent car among green trees

Image source: Getty Images.

De-SPAC results

ChargePoint went public on March 1 through a special purpose acquisition company (SPAC) merger. But unlike some de-SPAC companies in the EV space, the company has so far met its sales expectations and kept its future outlook unchanged. That's because it was already an established business before going public, with more than 4,000 commercial and fleet customers, and more than 132,000 charging locations on its network in North America and Europe.  

There is, and will be, plenty of competition in this space. But ChargePoint exists as one of the largest compared to other domestic and international players. Past and estimated future revenue of several in the sector are shown below. 

Company 2021 Revenue Estimate (million) 2020 Revenue (million)
ChargePoint $200 $146
EVBox $145 $84
Volta $47 $25
EVgo $20 $14
Blink Charging NP* $6.2

Data source: Company financials. *Not Provided

ChargePoint is the current favorite

ChargePoint already has a large lead in North America with a 70% share of Level 2 charging networks, which use 240-volt power. Its comprehensive network of offerings also includes more than 2,000 publicly available fast-charging stations. Its suite of products caters to the needs of EV fleet owners, parking operators, and consumers, as well as corporations and municipalities.

And in a sign of how large the market can grow, President Joe Biden has proposed installing 500,000 new charging stations in the U.S. as part of an infrastructure initiative. He also intends to electrify bus fleets and government vehicle fleets. While ChargePoint supports the infrastructure package, and would almost certainly be a beneficiary of its passage, the company doesn't need that catalyst for its charging network to grow rapidly. 

Woman charging electric car with ChargePoint charger

Image source: ChargePoint.

Investors should play the odds and think long-term

Betting on the EV sector is not a short-term strategy. But if the exponential global growth to more than 54 million vehicles by 2040 materializes, today's high valuations in the sector could eventually be more than justified. Just looking at the two with the highest and lowest 2020 revenue, respectively, the price-to-sales ratios are about 50 for ChargePoint, but 250 for Blink Charging (BLNK 3.81%)

A bet on the charging network sector has no guarantee of success, of course. It's possible that automakers will try to have proprietary networks similar to Tesla's (TSLA -0.18%) supercharger network model. But as automakers ramp up EV production, it would seem to make more sense for them to focus on what they know best, potentially including battery production. 

For an investor wanting to speculate for big gains, charging companies have an established business in a quickly growing sector. Dogecoin keeps going up as Elon Musk or others excite retail trader interest. But if that's the only reason it's rising, it can't continue long term. A charging company like ChargePoint should have better odds at providing long-term gains. 

Howard Smith owns shares of Chargepoint Holdings Inc. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Chargepoint Holdings Inc. Stock Quote
Chargepoint Holdings Inc.
$16.80 (2.20%) $0.36
Tesla, Inc. Stock Quote
Tesla, Inc.
$881.51 (-0.18%) $-1.56
Blink Charging Co. Stock Quote
Blink Charging Co.
$23.99 (3.81%) $0.88
Dogecoin Stock Quote
$0.07 (2.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.