The electric vehicle industry is experiencing challenging times. Macroeconomic headwinds have impacted growth, and intense competition has translated into margin compression. Sentiments have changed from bullish to significantly bearish. However, if there was a time to buy quality EV stocks, it’s now. This column focuses on three EV charging stocks to buy that are moving towards EBITDA-level profitability and, hence, better fundamentals.
It isn’t easy to discuss a recovery timeline for the industry. Investors should, however, focus on fundamentals. Buying and holding with patience will translate into wealth creation in the next few years.
The EV charging industry has ample headroom for growth. The number of EV charging stations in the United States will likely increase to 35 million by the decade’s end. Similarly, Europe would need to install 410,000 public charging points per year to meet the European Commission target of 3.5 million charging points by 2030. I therefore believe that healthy growth will sustain EV charging companies, and there is scope for massive wealth creation.
Blink Charging (BLNK)
Blink Charging’s (NASDAQ:BLNK) stock has largely been sideways year-to-date. However, there has been some correction in recent times due to a broad market downside. I see this as a good buying opportunity with multiple positives on the fundamental front.
The first point is that Blink has been delivering robust top-line growth. For Q1 2024, the company reported revenue growth of 73% on a year-on-year basis to $37.6 million. For the full year, the company has guided for revenue of $170 million (mid-range).
While top-line growth will moderate relatively for the full year, the company has a big addressable market in North America and Europe. Therefore, revenue will likely continue to increase at a healthy rate in the next five years.
At the same time, Blink Charging has guided for positive adjusted EBITDA by December 2024. With operating leverage and growth in services revenue, I expect EBITDA margin expansion to be sustained in 2025. Therefore, as fundamentals improve, BLNK stock is likely to trend higher.
Wallbox (WBX)
I believe that Wallbox (NYSE:WBX) stock is deeply undervalued at its current $1.5 price point. With EBITDA breakeven on the horizon and liquidity infusion, I expect a breakout on the upside in the coming quarters.
Towards the end of July, Wallbox announced a $45 million investment from Generac Power Systems (NYSE:GNRC), a leading global designer and manufacturer of energy technology solutions. This investment boosts the company’s financial flexibility and will likely support sales growth acceleration.
For Q2 2024, Wallbox reported revenue of 48.8 million euros, which was higher by 48% on a year-on-year basis. This was the EV charging company’s highest-ever quarterly revenue. It’s also worth noting that the company achieved the first month of positive adjusted EBITDA in June.
With the recent financing, healthy growth in DC charger sales, and an expanded product portfolio, I am bullish on continued improvement in the EBITDA margin. Once broader market sentiments improve, WBX stock is likely to surge higher.
EVgo (EVGO)
After a period of sustained correction, EVgo (NASDAQ:EVGO) stock has remained sideways for the year to date. There has been a recent rally backed by strong Q2 2024 numbers. I am bullish on further upside for EVGO stock from oversold levels.
For Q2 2024, EVgo reported revenue growth of 32.2% on a year-on-year basis to $66.6 million. During the quarter, the company installed 220 new DC fast-charging stalls. It’s important to note that the company’s adjusted EBITDA losses narrowed to $8 million. The company ended Q2 2024 with a cash buffer of $162 million, likely to ensure aggressive investments.
The EV charging company has guided for 7,000 EVgo-owned stalls in the next three to five years. EVgo expects revenue and adjusted EBITDA of $640 million and $204 million, respectively, from these owned stalls. The projections are, therefore, bullish. As the EBITDA margin improves in the coming quarters, I expect EVgo stock to remain in an uptrend.
On the date of publication, Faisal Humayun 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.