This EV stock could continue to outperform Tesla and the Nasdaq in 2022 and beyond

The first quarter of 2022 proved to be one of the most volatile quarters in recent US stock market history, as inflation concerns combined with valuation concerns, rising interest rates interest and persistent supply chain constraints.

Although all three major indexes posted gains in March — the S&P500the Nasdaq Compoundand the Dow Jones Industrial Average all ended the quarter with their worst percentage declines since the first quarter of 2020.

Electric car stocks and elective vehicle (EV) charging stocks were no different, with all major U.S. automakers except You’re here, losing to the market. However, even Tesla did not match the gains of ChargePoint holdings ( CHPT 1.27% ), which was one of the few unprofitable growth stocks that not only beat the Nasdaq Composite year-to-date (YTD), but is actually up on the year. Here’s why ChargePoint is crushing the market and still a great long-term buy.

Image source: Getty Images.

Room to run

ChargePoint fully meets charging needs. The company sells electric vehicle charging ports to residential, commercial and fleet customers. Even though electric vehicles are improving and 300+ mile range is becoming the industry standard, ChargePoint still believes there is a lack of charging stations, especially in the United States, to satisfy customers. decades of increased adoption of electric vehicles.

A graph showing EV range in miles.

Image source: Statista.

ChargePoint is not alone in its assessment. The Infrastructure Investment and Jobs Act provides $7.5 billion for charging infrastructure funding. But ChargePoint doesn’t expect those benefits to materialize until calendar year 2023 (which is essentially its 2024 fiscal year). ChargePoint expects the funding to last for five years.

Even without this support, ChargePoint projects 96% revenue growth for fiscal 2023 compared to 65% revenue growth for fiscal 2022 year-over-year. The fact that ChargePoint expects its revenue to nearly double in a year where the electric vehicle industry, as a whole, faces many challenges speaks to widespread optimism about the need for increase the load.

Situational awareness

ChargePoint announced its stellar results and upbeat outlook at a time when the broader market was tumbling, volatility was high and Wall Street seemed less interested in fundamentals and more focused on fear.

When the market continues to climb, you will often see a company reporting poor or even poor results and advice, but the stock will continue to climb anyway. The reverse is true during corrections and bear markets, during which companies can report great results and guidance and see their stock price change very little. In this vein, investors can actually get these great results and advice “for free” – so to speak. That seems to be the case for ChargePoint stock, which is now up 37% over the past month as investor optimism rebounds, and people seem to realize just how exceptionally the company is currently performing. .

CHPT Chart

CHPT data by YCharts.

Growth at full speed

The electric vehicle charging industry is very competitive. But ChargePoint stands out from the crowd by being one of the most aggressive spenders. Its strategy is not based on profitability but rather on building as many ports as possible and securing large customers early so that they are lifetime partners with ChargePoint.

The company already considers more than 50% of Fortune 500 companies as its customers. ChargePoint believes that companies of this size prefer to work with a single partner and that if ChargePoint has the largest network and offers the best value, it can grow its business with these companies as they seek more charging port benefits. to their employees and customers.

High risk, high reward

Despite its potential, ChargePoint is a risky investment as it is unprofitable and bets on an unproven industry. But for investors who believe in EV adoption and the need for charging, ChargePoint stands out as the best option in the space.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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