For many years, the electric vehicle (EV) industry, including EV charging stocks, has been plagued by two main adoption obstacles. Those include cars looking awkward and high upfront cost. Tesla (NASDAQ:TSLA) largely changed the shift for the former. But battery costs are still exerting a heavy toll on people’s EV perception.
Nonetheless, fans of quiet driving and cheap upkeep continue to show up. S&P Global forecasted that battery electric vehicles (BEV) will see growth by nearly 40% in 2024 compared to 2023. Likewise, Goldman Sachs (NYSE:GS) forecasted global EV penetration to increase to 17% by the end of 2025, compared to tiny 2% in 2020.
Whether that results as a pure play BEV like Tesla, its cheap BYD competition like Seagull, or Toyota-like hybrids, EVs will need a developed charging infrastructure.
Once the cost of batteries decreases (Goldman says 40% by 2025 from end-2023), alongside new battery tech advances like solid-state, companies in charge of charging EVs are poised to balloon.
These three EV charging stocks have the best shot at rising.
EVgo (EVGO)
Nearly half of the U.S. population lives within a close distance of 10 miles from an EVgo (NASDAQ:EVGO) charging station. This EV infrastructure company runs an owner-operator business model, with over 1,000 fast-charging locations.
Similar to a software as a service (SaaS) model, EVgo offers four tiers of monetization. It starts with free Pay As You Go that charges 99 cents per session to EVgo PlusMax charging $12.99 monthly for frequent EV users. As owner-operator, EVgo is in control of its charging infrastructure, able to fine-tune the balance between user feedback and maintenance.
Since fast-charging takes longer than filling up a fuel tank, the company routinely sets up collaborations with retail and commercial property owners. It aims to strategically position charging stations and increase traffic to partner businesses. This includes Amazon (NASDAQ:AMZN) partnership to leverage Alexa’s AI since January 2023. Also, BMW (OTCMKTS:BMWYY), Honda (NYSE:HMC) and GM (NYSE:GM) drivers are incentivized with EVgo credits.
In the latest Q1 of fiscal year 2024 earnings delivered in May, EVgo reported a record 118% year-over-year (YOY) revenue increase to $55.2 million. The company’s charging network delivered 53 GWh of electricity, which is a 194% YOY increase. Although EVgo still reported a net loss of $28.2 million, it is a 43% YOY improvement over the net loss in the year-ago quarter.
However, with added 109,000 accounts in the quarter, EVgo’s heavy capital expenditures are likely to start paying of in the near future. Presently priced at $3.62, EVGO stock is up 56% in the last six months.
Above the 52-week average of $2.86, EVGO shares still have some way to go to reach the 52-week high of $5.95 per share. Nasdaq’s forecasting consensus puts the average EVGO price target at $4.33 with $7 as the ceiling.
Eaton Corp. (ETN)
Greatly diversified, Eaton Corp. (NYSE:ETN) is one of the safest EV charging stocks to buy. Not only does the company manufacture critical components for aerospace, both military and commercial, but also its end-to-end supply of electrical systems covers broader industrial and residential markets.
In addition to charging software, Eaton Corp. develops and deploys AC and DC chargers and facility’s power management systems. This includes home chargers like the compact Power Xpert EVX wallbox. In March, Eaton expanded with its launch of Green Motion DC fast chargers. These are able to simultaneously charge two vehicles at each side of the compact station.
Ahead of the Q2 earnings report on August 1st, Eaton Corp. beat four consecutive EPS estimates, with the Q1 earnings per share of $2.04 and adjusted EPS of $2.40. The company delivered 8% YOY organic sales growth and 27% backlog growth in the Electrical division.
Of course, given the massive U.S. defense budget, Eaton Corp. also reported 11% aerospace growth. With a segment margins YOY improvement of 340 bp, and free cash flow increase by 40% to $292, Eaton Corp. makes a compelling investing case.
Over the last six months, ETN stock is up, presently priced at $297.88, well-above the 52-week average and closing in on the 52-week high of $345.19. Nasdaq’s average ETN price target is $343.17 per share.
Wallbox N.V. (WBX)
As an exposure to Europe’s take on EV charging infrastructure, Spanish Wallbox N.V. (NYSE:WBX) represents a key player in the EV charging stocks market. It supplies the global market with fast and ultrafast chargers for both homes and public use.
For example, U.K.’s TopCharger magazine gave Pulsar Plus 4.2 stars out of five. Not only is it built with robustness in mind, but also it has wide connectivity. This includes Google Assistant and bluetooth/Wi-Fi to Apple Watch and Android Wear app.
Like Eaton Corp., Wallbox N.V. released its Q2 earnings today. In the Q1 report, WBX delivered 23% more YOY sales, having improved realized gross margin by 600 bp after reducing the cost of labor and operating expenses at 21% and 30%, respectively. With the launch of Supernova 180 DC fast charger and Pulsar Pro in North America, Wallbox N.V. expects further growth.
Presently priced at $1.46, WBX stock has one of the highest potential gains, making it the top EV charging stock to buy. While the current price is under the 52-week average of $1.78, Nasdaq’s forecasting consensus places average WBX price target at $4.13, with even the bottom of $3.25 indicating at least 2x gains.
On the date of publication, Shane Neagle did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.