Tritium DCFC Ltd (DCFCQ)

[WeTheMarket]

Which EV Charging Stocks Are the Best Bets? One Analyst Suggests 2 Names to Consider
By Michael Marcus
Jun 21, 2022
https://www.tipranks.com/news/article/which-ev-charging-stocks-are-the-best-bets-one-analyst-suggests-2-names-to-consider

The Biden administration is pushing hard to promote electric vehicles (EVs). From a $7.5 billion provision in the ‘Build Back Better’ bill to political pressure on automakers to commit to increased production with the goal of converting 40% of car sales to EVs by the end of this decade, it’s clear that under Biden, the government has the will to enforce a major shift in the automotive industry.

The Biden administration has also prioritized the production of EV battery systems, to the tune of $3.1 billion in Federal funding for battery manufacturers. With that support in place, investors may be able to find plenty of opportunity in EV charging stocks.

Against this backdrop, one analyst, Christopher Souther of B. Riley Securities, has picked out 2 stocks in the charging segment with potential for solid gains going forward – gains on the order of 50% or better. We ran the two through TipRanks database to see what other Wall Street’s analysts have to say about them.

Tritium DCFC Limited (DCFC)

Tritium is an Australian firm that’s been in the electric charger business since 2001. The company focuses on DC (direct current) fast chargers, manufacturing both the software and hardware for these advanced EV charging systems. The company has over 6,700 chargers in operation in more than 41 countries. Tritium’s fast chargers are designed to fill a major need in the EV segment by reducing recharge times; the DC fast charger tech can bring most consumer EVs to an 80% charge status in less than 45 minutes.

Tritium has recently announced moves to expand its product footprint. In April of this year, the company entered a multi-year contract with the energy sector giant BP, to provide chargers and support services for BP’s EV charging network. The initial order under this contract includes just under 1,000 charging stations in the UK, Australian, and New Zealand markets.

In May of this year, Tritium followed that up with an announcement that it had contracted to provide 250 chargers to the UK’s Osprey network, a fast-growing player in the British rapid EV chargepoint sector. Tritium’s contribution is expected to increase the Osprey network by more than 50%.

These moves bode well for Tritium, which entered the public markets through a SPAC merger in January of this year. Since going public, however, the stock is down by 42%.

In Souther’s comments on Tritium, he writes of his belief that this company has a leg up in the DC fast charge market segment, given its status as a pure-play actor in the field.

“We believe that Tritium is well positioned with key customers across public network operators, fleets, utilities, and heavy-duty/industrial vehicles, providing strong visibility on revenue growth. New customer wins have been driven by Tritium’s differentiated factors, including its products’ lower cost of ownership, its liquid-cooled technology, and its new modular scalable charging (MSC) platform,” Souther opined.

“As Tritium’s installed fleet grows, we believe revenue from recurring software and service is likely to scale to become meaningfully accretive to margins. We see the company’s hardware sales model as providing better operating leverage than peers with less-focused business models and higher cost structures,” the analyst added.

Along with this upbeat outlook, the analyst sets a Buy rating on Tritium shares, and a $12 price target that indicates confidence in an 89% upside for the coming 12 months. (To watch Souther’s track record, click here)

It’s not often that the analysts all agree on a stock, so when it does happen, take note. Tritium’s Strong Buy consensus rating is based on a unanimous 5 Buys. Tritium shares are priced at $6.34 and their average price target of $14.40 implies an upside potential of ~127%.