EV charging stocks suffered this year, largely due to apparent reduced interest in overall EV offerings. But, increasingly, it seems as though that bearish sentiment was misguided, offering a prime purchase opportunity for some of the top EV charging stocks.
Instead, EV sales are steady. U.S. plug-in vehicle sales, which benefit EV charging stocks most, increased 30.6% year-over-year (YoY) in November, with little indication of slowing. If anything, the EV trend will accelerate. Canada is poised to pass legislation mandating zero-emission vehicle sales by 2035, effectively pushing combustion-based cars off the road.
And while other alternatives exist, like hydrogen fuel cell vehicles, the fact stands that the vast majority of zero-emission cars sold will be of the plug-in EV variety. This global sentiment bodes well for these EV charging stocks to watch and, coupled with recent underperformance, represents a huge opportunity for your portfolio.
ChargePoint Holdings (CHPT)
ChargePoint Holdings (NYSE:CHPT) took a beating in September. The EV charging stock posted plummeting earnings in light of shaky economic conditions. But, despite a $0.24 per-share loss, ChargePoint’s sales remained solid as revenue grew 39% YoY. Realistically speaking, the underperformance did not come from CHPT’s business model or overall viability. Instead, it’s a series of wholly external economic factors putting downward pressure on the EV charging stock. And those pressures seem to be abating.
Building, expanding, and maintaining a national EV charging network is expensive. Until recently, debt was cheap enough that borrowing against future profits to expand today was easily justifiable. Of course, Fed rate hikes put an end to that era. Companies like CHPT had to find alternative funding that increasingly cut into their bottom line. But that storm seems to be lifting as markets increasingly account for a series of rate cuts in 2024. If those predictions bear out, CHPT’s dominant market share and strong financial position could put it at the top of the list of EV charging stocks to buy.
Enphase Energy (ENPH)
Enphase Energy (NASDAQ:ENPH) is a riskier EV charging stock play. Economic conditions seem to be burdening the company more than others. Enphase announced a restructuring plan that includes laying off 10% of its global workforce. The company is also halting operations at some microinverter plants to focus production efforts in South Carolina and Texas. Layoffs, especially before the holidays, rarely serve as a bullish signal for investors.
But, in the long term, ENPH’s standing as a top at-home EV charging stock makes it the best option today if you’re forecasting an EV-focused future. Enphase stands as one of the top solar stocks by market share. But it has something companies like Canadian Solar (NASDAQ:CSIQ) don’t—dedicated, at-home EV charging solutions for average car owners. Instead, these companies have loftier goals and offer grid-integrated sustainable home power solutions that could be used for EV charging rather than designed to do so.
The company designs its EV charging offerings with consumers in mind. Enphase keeps prices (comparatively) lower while offering buyer-friendly features like WiFi integration, charging speed and more. Enphase also offers whole-home solar energy solutions. This makes ENPH the perfect bridge for new EV owners to begin expanding their sustainable living efforts. And, once a company like Enphase gets its hands on a customer, that customer tends to stick with what they know.
NXP Semiconductors (NXPI)
Of course, EV charging isn’t possible without robust internal components. And NXP Semiconductors (NASDAQ:NXPI) stands to gain no matter which EV charging stock ultimately becomes the next Shell (NYSE:SHEL) or ConEd (NYSE:ED).
NXP offers products supporting a range of sustainable energy solutions, including e-scooters. But the company’s EV charging chips take top billing and are what could send NXP shares skyrocketing as global adoption accelerates. Since chips are needed in residential and commercial EV charging hardware, NXP is agnostic in the arms race. They’ll come out on top no matter what.
NXPI’s financial strength, combined with strong stock performance this year, also ensures its longevity as other semiconductor competitors begin crowding the space. The company’s gross margin is a massive 58.5%, and automotive products make up the bulk of its revenue. At the same time, that portion of NXPI’s revenue sources is climbing, and automotive sales increased 5% YoY—reinforcing the thesis that EV enthusiasm isn’t waning. It just took a brief pause. And NXPI is ready for the resurgence.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
