Let’s talk a bit out about EV stocks. Electric vehicles are not a new technology – in fact, they date back almost to the earliest days of the automobile – but today’s materials, batteries, and electronics have brought them into their own, as a more mature technology. It’s clear that EVs are here to stay. What is less obvious is that they are bringing a host of ancillary tech and services with them. Prominent among these are charging companies.
The charging network is the vital infrastructure that will make pure battery-powered EVs fully viable. The political will exists to expand current networks into full national coverage, and an array of companies are moving in to design, build, and install those networks, as well as commercial charging locations and individual stations.
For investors who don’t want to break the bank, and are interested in EVs and EV charging, there are plenty of EV charging stocks available for under $10 per share. We’ve used the TipRanks database to look up a couple of these stocks. They combine that low entry cost with a Strong Buy consensus rating and potential to double in the coming year. Let’s take a closer look.
Volta (VLTA)
The first stock we’re looking at, Volta, has built its own niche within the larger world of EV charging – it has combined charging stations with on-site video advertising, and offers the combined installation to property owners as a revenue generating build-out. Volta’s charge stations, more than 2,200 of them, are found throughout the lower 48 states, and collectively had delivered over 100 million ‘electric miles’ of driving, saving users more than 3.9 million gallons of gas.
Generally, Volta’s charging stations are offered without fees to drivers, as the costs are carried by the advertisers. Ads are shown on video screens built into the charging units, and installations are typically built on commercial properties; store owners, for example, can install a set of Volta charging stations to take advantage of the ad revenue – and attract EV owners as customers.
This company entered the public markets less than six months ago, at the end of August 2021, through a SPAC transaction. The business combination with Tortoise Acquisition Corporation II ended up netting less than expected; the combo had aimed at $645 million, but Volta realized approximately $400 million gross proceeds. Since the SPAC transaction was completed, Volta’s shares have been volatile – and are currently down 49% from their initial trading price.
While the share price is down, Volta has been making moves to expand its network footprint. In November, the company entered into an agreement with Cinemark, the movie theater chain, to build out new charging installations at Cinemark theaters. This agreement expands Volta’s existing partnership with the theater company; select Cinemark theaters have boasted Volta charging points since 2018. And, in December, Volta made a bold move to enter the European market, announcing moves to enter the charging sector in Germany, Austria, Switzerland, and France.
Volta released its first quarterly results as a public company this past November. The key point was a 77% year-over-year increase in total revenue, to $8.49 million. For the first nine months of 2021, the company saw revenue nearly double, from $11 million to $20.1 million. Preliminary data for the full year puts Volta’s total installed charging stations between 2,300 and 2,500, with more than 1,300 in the construction backlog.
This stock has attracted the attention of 5-star analyst Jed Dorsheimer from Canaccord Genuity. In his initiation of coverage report, Dorsheimer rates Volta shares a Buy, and his $10 price target implies a potential upside of 107% for the coming 12 months. (To watch Dorsheimer’s track record, click here)
Backing his stance, Dorsheimer writes, “We believe Volta’s unique charging and media business model is an opportunity for investors to gain exposure to EVs and charging infrastructure, with a turn-key media and advertising revenue stream providing a near-term hedge and additional long-term recurring revenue as charging station utilization increases… The company trades at comparably low multiples to the peer group but at a 2.5x multiple to its cash position, or $2.00 of cash per share, to provide investors comfort to downside risk.”
Overall, Wall Street has been showing some love for Volta, giving the stock a 3 to 1 breakdown in favor of Buys over Holds to support the Strong Buy consensus rating. Shares are selling for $4.81 with an average price target of $11.50 suggesting room for an impressive 139% one-year upside potential. (See Volta stock forecast on TipRanks)
Tritium (DCFC)
The second stock on our list is Australia-based Tritium, an EV charger company aiming at the global market. Tritium, which was founded in 2001, manufactures both the hardware and software for DC fast chargers, the charge stations that offer users the shortest recharging times for their EVs. DC fast charging stations are capable of recharging most consumer EVs to 80% in 15 to 45 minutes.
Tritium already boasts that is has 6,700 chargers installed in 41 countries. More importantly, its charging stations are capable of operating in a wide range of temperatures, from -31 F (-35 C) to 122 F (50 C); this is a key point in Tritium’s favor, as ambient temperature is known to affect EV charging times and efficiency.
As 2022 opened, Tritium raised new capital for operations by going public – the company completed a SPAC combination with Decarbonization Plus Acquisition Corporation II on January 13, and the DCFC ticker debuted on Wall Street, on the NASDAQ index, on January 14. The stock closed on its first day of trading at $9.22, and has since fallen by 29%. Tritium realized US$403 million from the SPAC combo, and currently shows a market cap of US$995 million.
In the weeks since the SPAC completion, Tritium continued to move on the expansion of its global footprint. The company on January 28 announce a partnership with Electromin, a Saudi company that provides e-mobility solutions in the Middle East and Africa. The agreement is in the context of the Saudi government’s push to increase the use of electric vehicles.
Initiating coverage of Tritium for Raymond James, 5-star analyst Pavel Molchanov points out key advantages in the company’s technology: “To propel the light-duty electric vehicle adoption curve, more and faster infrastructure is essential. DC fast charging is already commonplace, and ultra fast technology represents the leading edge. Tritium provides these two types of chargers — not the slower, “old school” Level 2. As with all clean tech hardware, some commoditization is inevitable, but the ramp-up of the company’s service and software offerings should give the margin profile a boost.”
Molchanov believes this technological advantage puts Tritium in a solid position going forward, and he gives the stock an Outperform (i.e. Buy) rating. His $10 price target indicates confidence in an upside of ~54% for the year ahead. (To watch Molchanov’s track record, click here)
Wall Street generally is even more bullish than Molchanov on this stock. DCFC gets a Strong Buy consensus rating based on 3 reviews which are unanimous in their positive outlook. The stock is currently trading for $6.50; its average price target of $14.33 implies a robust 120% upside for the year ahead. (See Tritium stock forecast on TipRanks)
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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.
