Please ensure Javascript is enabled for purposes of website accessibility

Why ChargePoint Is My Favorite EV Charging Stock Right Now

By Howard Smith - May 18, 2021 at 7:36AM

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

With several to choose from, the North American leader is at the head of the pack.

Investing in the electric vehicle (EV) sector isn't for a conservative portion of your portfolio. But speculating on high growth can have a place in just about any investment plan. And investing in the infrastructure needed for all EVs might be easier than trying to pick the winners among vehicle manufacturers themselves. 

That's not to say charging companies will all succeed, or that all are worth buying today. One way to narrow down favorites is based on market leadership, as well as how management has presented its future outlook. The top two based on market share are North American leader ChargePoint Holdings (CHPT 13.06%) and leading European provider EVBox, which will soon go public through a merger with SPAC TPG Pace Beneficial Finance (NYSE: TPGY). Below is a breakdown in more detail.

ChargePoint EV chargers in multifamily home complex

Image source: ChargePoint Holdings.

Breaking them down

Investors haven't been able to participate in ownership of charging-station network leaders until recently. Before companies in the sector became the targets of mergers with SPACs, one popular name with investors was Blink Charging (BLNK 8.74%). But larger and more established options are also now available to retail investors. Others with upcoming scheduled SPAC merger closings include EVgo: Climate Change Crisis Real Impact I Acquisition (CLII) and Volta: Tortoise Acquisition II (SNPR)

Some SPAC investor presentations attempt to predict revenue growth out several years. But with so much uncertainty involved, it would seem less relevant to consider estimates beyond this year. The table below shows these companies measured by 2020 revenue and 2021 estimates. 

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

DATA SOURCE: COMPANY FINANCIALS. *NOT PROVIDED.

Volta and EVgo are each focused on specific niche applications. Volta's chargers are placed in consumer destinations like shopping centers. This allows refueling to be done at a preferred shopping destination, rather than being the destination itself. Volta's stations include advertising monitors, giving the company another source of revenue, and aiming to allow commercial businesses to target incoming customers, adding value for the merchants.

EVgo calls itself only pure-play DC fast charger, owner, and operator. Fast chargers can fully recharge vehicles in under an hour, and in some cases under 30 minutes, compared to several hours for Level 2 chargers that use 240-volt power.

Both ChargePoint and EVBox have more established and diversified networks. EVBox has sold more than 235,000 charge ports, the most of any company. It is the leading charging network in Europe, and says it is "actively expanding in the United States," with a dedicated U.S. sales force and manufacturing facility in Illinois.

ChargePoint has more than 132,000 charging locations, and over 4,000 commercial and fleet customers. The company says it has more than 70% of the North American Level 2 network market. It also is already operating in 16 European countries. ChargePoint also has more than 2,000 publicly available fast-charging stations.

Diversified, but no guarantees

The business combination bringing EVBox public is expected to close in June 2021. TPG Pace Beneficial has submitted the registration statement on the merger confidentially to the Securities and Exchange Commission (SEC). Based on the valuation initially presented when the merger was announced, EVBox would have a market capitalization of about $1.4 billion at the current share price. 

That makes EVBox clearly cheaper on a price-to-sales basis, as ChargePoint's market cap is approximately $6.5 billion. But with its registration statement remaining confidential, there is a question as to whether the initial merger announcement details will stand. Investors will know in about a month when the transaction is complete.

But regardless of the higher valuation, I think ChargePoint is the better buy right now. Being established in the U.S. and with growth already well under way in Europe, the company is well positioned. Its diversity of offerings may also be an advantage, as fast-charging and Level 2 networks will both have a place when EVs are more prolific. It remains to be seen what type of charging routine consumers will embrace most, so being diversified spreads those bets.

There is no guarantee that any charging network company will prosper. It's possible that auto manufacturers will attempt to maintain proprietary charging infrastructure similar to Tesla (TSLA 4.67%).  That seems unlikely, though, because 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. And to have as vast a charging network as possible available for customers. And there is the possibility that the infrastructure evolves into a commodity with few margin growth opportunities. A basket approach may also be best in this sector, as it's still early and some should do well, while others may not. But for investors wanting to participate themselves, ChargePoint seems to be a good place to start.

Howard Smith owns shares of Chargepoint Holdings Inc., Climate Change Crisis Real Impact I Acquisition Corporation, TPG Pace Beneficial Finance Corp., and Tortoise Acquisition Corp. II. 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.
CHPT
$18.87 (13.06%) $2.18
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$900.09 (4.67%) $40.20
Blink Charging Co. Stock Quote
Blink Charging Co.
BLNK
$26.75 (8.74%) $2.15
Climate Change Crisis Real Impact I Acquisition Corporation Stock Quote
Climate Change Crisis Real Impact I Acquisition Corporation
CLII
Tortoise Acquisition Corp. II Stock Quote
Tortoise Acquisition Corp. II
SNPR

*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
389%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

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.