If you’ve heard it once, you’ve heard it at least one hundred times: A charging infrastructure is essential to the mainstream adoption of electric vehicles (EVs). Not surprisingly, Tesla (NASDAQ:TSLA) is a key player in this space. But there are several other companies in the mix. And this list includes some under-the-radar companies that may point to the future of EV charging.
For investors who don’t follow the sector closely, it may be surprising to hear that electric vehicles made up 10% of the global EV market at the end of 2022. But it’s the current, and future, growth of this sector that has many analysts excited. By 2040, analysts predict that EVs will make up 58% of global passenger vehicle sales.
By that time, battery technology breakthroughs may change the landscape of EV sales and charging technology. But at this moment, the speed, availability and convenience of EV charging is top of mind for investors. And there are a surprising number of options. The three stocks on this list may not be household names like ChargePoint (NYSE:CHPT) or Blink Charging (NASDAQ:BLNK), but they could represent the future of EV charging.
Wallbox (WBX)
This isn’t the first time I’ve written about Wallbox (NYSE:WBX) and it probably won’t be the last. Wallbox addresses the interoperability obstacle among all EV makers — a critical issue in the future of EV charging. Simply put, at this time, there is no standard for EV chargers. So, the charging station you drove to may not have the right connection for your vehicle.
Tesla offers adapters allowing every EV to charge at a Tesla charging station. Wallbox takes this a step further. The company’s Supernova DC fast charging station network is already compatible with every EV on the market. And Wallbox already sold over 1,000 of these chargers, with triple-digit growth forecasted.
Like many small-cap stocks, Wallbox does not receive heavy analyst coverage. However, of the nine analysts that have offered a rating, all of them give WBX a Strong Buy or Buy rating. Plus, the consensus price target of $7.03 is an over 125% increase from the company’s closing stock price as of August 29, 2023.
Allego (ALLG)
Allego (NYSE:ALLG) is a choice for investors comfortable with some international exposure. The company operates the largest public EV charging network in Europe, with over 750 fast-charging locations and 34,000 charge points across the continent. In its last quarter, Allego reported year-over-year revenue growth of over 34%.
The company also has a backlog of 1,350 sites, up over 22% year-over-year. Plus, Allego says it has another 1,000 additional sites in its pipeline. One of the next challenges for the company is to address the ability to supply power to its charging stations via renewable energy (i.e., green energy). To that end, through the first half of 2023, the company has power purchase agreements (PPAs) with several renewable energy companies. The agreements should supply 160 GWh.
KraneShares Electric Vehicles and Future Mobility Index ETF (KARS)
Investing in the future of EV charging is not without risk. With so much change likely to happen in the future, it can be difficult to pick individual stocks. That is one of the problems for which exchange-traded funds (ETFs) are a solution.
The KraneShares Electric Vehicles and Future Mobility Index ETF (NYSEARCA:KARS) exposes you to the entire EV industry. But it also includes several EV charging stocks. Because it includes companies with initiatives that may enhance future mobility, the fund is a good place to reach up-and-coming EV charging stocks.
The fund is still a small fund, with only $197.77 million in net assets under management. And it does have a 0.72% expense ratio, which is a little higher than some investors would like. On the other hand, you get a dividend yield of 1.06%, which may be a reason to take a small position as part of your speculative portfolio.
On the date of publication, Chris Markoch 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.
