Buying More of These Shares on Weakness

We’ve sat on the sidelines with Action Alerts PLUS holding ChargePoint (CHPT)  of late, understanding that higher-beta stocks can be harder hit than most when the overall stock market moves lower. Recent insider selling certainly and year-end tax selling hasn’t helped.

Since mid-September CHPT shares have fallen more than 57% vs. the 1.7% decline in the S&P 500. Over that time, investor sentiment toward the larger EV space has waned as evidenced by the significant drop in other EV-charging stocks like EVgo (EVGO) , Blink Charging  (BLNK) , and Volta (VLTA)  and pure-play EV companies ranging from Tesla (TSLA)  and Nio (NIO) to Xpeng (XPEV) and Rivian Automotive (RIVN) .

To give an idea as to how far behind the curve the U.S. EV charging situation is, in Europe, there are currently about 400,000 fast-charging stations compared to 47,000 in the U.S. The EU has committed to increasing that number to one million by 2025 while the Biden Infrastructure Law targets 500,000 charging stations across the country by 2030. At the same time, the auto industry continues to shift its production toward EVs from combustion engines. The why behind that is to meet the shifting consumer preference for EVs.

According to the EY Mobility Consumer Index 2022 study, more than half of worldwide consumers planning to purchase a car will choose a fully electric, plug-in hybrid, or hybrid vehicle. In 2019, EVs and hybrid vehicles were just 6% of vehicles produced (five million), but production in 2022 has tripled and is now at 18% of global passenger car production, forecasted to rise to 25% in 2023 with more than 20 million EVs produced in 2023. And let’s keep in mind that is the passenger car market, which doesn’t factor in other vehicle types ranging from vans, buses, and a wide variety of trucks, including commercial fleets. Against those forecasts, we don’t see the EV charging pain point disappearing anytime soon.

In its most recent 10-Q filing, ChargePoint had $397 million in cash and equivalents on its balance sheet making it one of the better capitalized EV-charging companies, and one that should remain well funded over the coming year, unlike others in the space. More than likely that means a few EV-charging companies will either need to raise more capital in 2023 or fall by the wayside. If it’s the latter, that would reduce the competitive dynamics at work in the EV-charging space and be a positive for ChargePoint.

As we sit here today, CHPT shares are very oversold, something we haven’t seen since January and May of this year. Both of those instances proved to be solid entry points into the shares. What’s different this time around is we are that much closer to seeing the positive effects tied to the Biden Infrastructure Law for building out the U.S.’s EV-charging network. That is what prompts us to get off the bench and buy more CHPT shares at current levels, a move that will also reduce the portfolio’s cost basis.

After you receive this Alert, we will buy 1,950 shares of ChargePoint at or near $8.25 per share. Following the trade, CHPT will represent roughly 2.9% of the portfolio.

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade’s executed price here. Be sure to toggle the chart to sort by Purchase Date.)