Say ‘electric vehicle’ these days, and Elon Musk is probably the first association that will come to mind. After all, he’s a headline machine – but his Tesla company has proven that electric vehicle (EV) market can be profitable for automakers and investors alike.
But cars aren’t the only game in town for investors who want to buy into the EV sector, and worthwhile stocks don’t need to have Tesla-level prices. EVs are bringing a range of supporting technologies and infrastructure with them, from battery manufacturers to charging companies, and savvy investors can find affordable opportunities in that supportive network.
Today, we'll look into the charging companies. While they may not exude the same appeal as the car makers, those cars won’t get very far without the charging infrastructure that their support companies will make available. The charging companies, while they may be somewhat speculative for now, are coming onto the scene with a built-in advantage: they service is essential in their industry.
We've used the TipRanks database to pinpoint two EV charging stocks that have earned a thumbs up from members of the analyst community. These are Buy-rated firms, currently selling for under $10 per share, and with the chance of doubling or better in the months ahead. Let's take a closer look.
Nuvve, the first stock we’ll look at, is a truly unique company in the charging station universe. It puts its own twist on charging tech, in a way that can promote the use of renewable energy sources. Simply put, Nuvve uses bidirectional charging stations that can connect EVs to the local electrical grid – and allows the cars’ batteries to act as storage for renewable energy producers or to discharge power back to the local grid when needed. Vehicle owners can pre-set the charging station to provide a fully powered car when the time to drive rolls around.
This company entered the public trading markets in March of last year, through a SPAC business combination with Newborn Acquisition Corporation. The NVVE ticker started trading on the NASDAQ on March 23, and the company realized $62 million in cash from the transaction. In the 13 months of trading since, the company’s stock has been highly volatile, and has fallen 54%.
Even though the shares have fallen, Nuvve has had positive news to report in its quarterly financial releases. To start with, the company continues to be successful at raising grant revenue, which has risen sequentially in each of the last three quarters; for 4Q21, the last reported, it stood at $1.2 million.
In April of this year, Nuvve announced that it had been selected by the US Department of Energy to act as a collaboration partner in the adoption and acceleration of ‘vehicle to grid’ technology, the company’s specialty. The partnership will give Nuvve access to Federal funds, as well as political support.
Looking at Nuvve’s recent performance, and the way it has developed its niche, 5-star analyst Eric Stine from Craig-Hallum sees a bullish future ahead.
"We see the move to electrification as inevitable in a host of transportation applications with numerous drivers including the regulatory backdrop, accelerating OEM commitments, and expanding corporate sustainability goals. We also see the need to upgrade and strengthen the electrical grid as an important objective. Vehicle-to-grid (V2G) sits at the crossroad of both and NVVE is the market leader with a technology advantage, important partnerships, and it positioned as a key enabler of both of these multi-decade trends," Stine opined.
Based on the above, it’s no wonder Stine reiterated his Buy rating on Nuvve shares. With a price tag of $16, the analyst believes shares could surge ~155% in the next twelve months. (To watch Stine’s track record, click here)
This small-cap firm has slipped under the radar a bit, and only has 3 recent analyst reviews. These all agree, however, that it’s a stock to buy, making the Strong Buy analyst consensus unanimous. The shares are selling for $6.27 and their $22 average target indicates room for a 250% upside over the next 12 months. (See Nuvve stock forecast on TipRanks)
Now let’s look over at Europe, where Allego is a leader in the continent’s public EV charging network. The company’s network of charging stations, including more than 28,000 charge points across Europe, also includes more than 750 of the newer fast charging stations. These charge points, usually located in metro areas or near highways, allow drivers to recharge their vehicles in far less time than older charging stations, and can accommodate multiple brands and charging standards of EVs.
Allego, which has been in business since 2013, also offers fleet charging services, and is available for tourist use and business accounts. The company’s charging units are compatible with both personal and commercial vehicles, from small cars to larger trucks.
Last month, Allego entered the US stock markets through a SPAC transaction. The company merged with Spartan Acquisition Corporation III, in a business combination that brought Allego approximately $161 million in gross proceeds.
Gabe Daoud, in his coverage of Allego for Cowen, is unabashedly bullish, saying of the company: “ALLG stands out as a pan-Euro EV charging leader poised to benefit from significant tailwinds that have (and will likely continue) to leave the EU as an EV adoption leader years ahead of the U.S. We see outsized growth in DC energy delivered providing an attractive market opportunity ($20B p.a. by '30) that augurs well for shares.”
Just how well it augurs for the shares? Daoud answers: “Our analysis suggests healthy returns with a ~5 year payback period and 22% IRRs based on our forecast of utilization improving to 25% vs. 10% currently. Allego’s business calls for significant expansion beyond the ~800 owned DC ports today, as management expects to develop 1,300 sites in backlog/ pipeline and then some which provides significant operating leverage moving forward.”
Altogether, Daoud gives ALLG an Outperform (i.e. Buy) rating, and sets a price target of $19 for the year ahead, implying an upside growth of 123% for the shares. (To watch Daoud’s track record, click here)
This new stock has only had time to pick up 2 analyst reviews from the Street – but they are in agreement that it’s a stock to buy, giving ALLG its Moderate Buy consensus view. Allego’s stock is selling for $8.52 and its $17 average price target suggests ~100% upside over the next 12 months. (See Allego stock forecast on TipRanks)
To find good ideas for EV stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
