While the U.S. labor market appears robust with unemployment rates nearing historic lows, some veteran investment experts suggest that the U.S. economy has not shaken off the shadow of a recession, and there remains a significant risk of a steep decline in the stock market.
Taking the Conference Board’s Leading Economic Index as an example, which incorporates various variables such as bond and stock market activity, manufacturing activity, consumer confidence, and lending activity, and boasts a perfect track record in predicting economic recessions, it is currently signaling an impending downturn.
Once the stock market undergoes a correction, it may present a favorable opportunity for the following electric vehicle (EV) charging stocks, as valuations are likely to enter highly attractive buying zones, enabling investors to acquire these stocks at minimal cost.
ChargePoint (NYSE: CHPT) is one of the largest electric vehicle charging networks globally. The company offers a comprehensive range of solutions from hardware to software, providing whole suite of services for charging infrastructure. At present, the bullish case for this stock lies in its recent significant decline in share price, leading to a price-to-sales (P/S) ratio bottoming at 1.1. Indeed, ChargePoint has demonstrated robust revenue growth in recent years, and analysts expect this growth trajectory to continue, albeit at a slightly slower pace.
In the event of a sharp decline in the stock market, the valuation of this electric vehicle charging stock may improve significantly, with its fundamentals laying a solid foundation for outperformance compared to its peers. Additionally, ChargePoint currently holds a net cash position of $567.6 million. However, its Altman Z-Score model scores at -2.04, indicating an increased bankruptcy risk, which may necessitate a reduction in valuation to validate the reasonableness of this risk.
Blink Charging (NASDAQ: BLNK) specializes in providing electric vehicle charging stations for various locations such as residential, commercial, and public spaces. The company achieved a fourth-quarter revenue of $42.71 million, marking an 88.9% year-over-year growth and laying the foundation for a strengthening stock price. Most significantly, the company surpassed expectations in key revenue categories including product sales, charging service revenue, and car-sharing services.
The management’s goal is to expand the charging network by deploying more charging stations in different locations like residential, commercial, and public areas to meet the increasing demand for electric vehicles. Blink Charging currently has a price-to-sales ratio of 1.74, with a forward price-to-sales ratio of 1.40, making its valuation highly attractive. It is worth noting that the company incurred significant losses totaling $203.69 million in the past 12 months. If a significant stock market decline triggers a notable pullback in the stock price, investors may consider building moderate positions.
EVgo (NASDAQ:EVGO) is a prominent electric vehicle charging company specialising in fast charging solutions. The company operates and maintains a network of charging stations across the United States. The financial results show that the company reported significant revenue growth in the fourth quarter of 2023 and steady growth. In 2024, EVGO plans to further expand its charging infrastructure to meet the growing demand for electric vehicle charging solutions.
On the operation front, EVgo achieved record network throughput, reaching 130 GWh in 2023, an increase of 189 per cent year-on-year. In addition, more than 3,500 charging posts were in operation or under construction by the end of 2023. As for 2024, management expects total revenues to be in the range of $220 million to $270 million, with adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of negative $48 million to negative $30 million.
If you are interested in electric vehicles and battery technology, please pay close attention to First Phosphate (CSE: PHOS) (FSE: KD0). First Phosphate is the only publicly listed company that is fully dedicated to extracting and purifying phosphate for the production of cathode active material for the Lithium Iron Phosphate (“LFP”) battery industry. LFP batteries operate similarly to other lithium-ion batteries. They have the advantage of being non-toxic, having superior fire safety, longer cycle life and lower cost. The company is the Building Block for a North American LFP Battery Ecosystem, the company holds a total of 1,500+ sq. km of royalty-free land claims in the Saguenay-Lac-St-Jean Region of Quebec, Canada consisting of rare anorthosite igneous phosphate rock that generally yields high purity phosphate material devoid high concentrations of harmful elements.
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