Every quarter I write one paragraph on each of my picks to quantify why I’m long and what I expect, notes Adam Johnson, a long-term, growth stock expert and editor of Bullseye Brief. Here, he looks at three of his recommended clean energy favorites.
ChargePoint Holdings, Inc. (CHPT) is the global #1 provider of EV chargers for both commercial and home use, with someone plugging into a ChargePoint charger every two seconds. The company leverages rising EV demand with first mover advantage and recurring revenue.
The company not only manufactures chargers which it sells through retailers like Home Depot (HD), it also serves EV customers as the largest platform operator of integrated hardware, cloud services and support. If you are traveling coast to coast, ChargePoint will map out your route from charging station to charging station and coordinate all billing.
If you are a fleet operator, ChargePoint’s AI-powered software will optimize charging times and route scheduling. Revenues are rising 75%, and the company could generate positive cashflow by 2023, as well as profits by 2025.
As EV penetration rises, ChargePoint’s business could grow manyfold, as there are currently one-fourth as many charging stations in the US as gas stations (40k vs 170k). My target of $65 reflects a price to sales multiple of 10x estimated 2025 revenue of $1.5M.
Plug Power Inc. (PLUG) is the leading hydrogen ecosystem enabler has scale and first-mover advantage in a potential $200B clean energy market.
Plug aspires to lead the conversion of industrial/construction vehicles from diesel to hydrogen over the next decade. The company produces more liquified hydrogen fuel than all competitors combined, and has articulated a 10-year plan to add capacity backed by long-term supply agreements with major fleet operators.
Plug Power also builds the hydrogen consuming fuel cells which produce 100% green electricity and operates the world’s largest hydrogen distribution network. Revenues could double this year, potentially enabling positive cashflow by Q3 and setting the stage for after-tax profitability by 2023.
JPM estimates Plug’s market opportunity at $200B, which creates a significant runway for growth, especially given the company’s scale and first-mover advantage. My price target is $49.
Sunnova Energy International, Inc. (NOVA) is a leading solar provider with the largest installer network; it leverages the transformative shift to "residential solarfication".
Sunnova ranks as the nation’s third largest installer/servicer and network operator of residential solar systems, but number one in terms of profitability… no other company comes close to matching its industry-high gross margins of 50%.
Sunnova’s regional network of dealers provide flexibility and lower operating costs, while its sophisticated use of tax credits and customer contract securitization generate significant operating leverage.
Last year the company acquired the in-house solar installation subsidiary of Lennar (LEN), called SunStreet, tripling its access to prospective customers and likely driving top line growth by at least 40% through 2023. Trading at 6 times sales estimates for 2022, I think shares could rise significantly given +50% top line growth.
Near-term, easing of Chinese tariffs could lower poly silicon input prices. Longer-term, the pivot to residential solarfication could drive NOVA many turns higher — fewer than 2% of US households rely on self-sufficient solar systems.