In a review of his portfolio holdings, growth stock expert Adam Johnson — editor of Bullseye Brief — provides an update on several of his favorite auto-related, clean energy favorites for long-term investors.
Aptiv (APTV) leads the world in the manufacturing of wiring harnesses for electric, hybrid electric and advanced gasoline powered vehicles.
The company’s unique platform integrates all components of the on-board electrical system, from sensors and semiconductors to the actual wiring itself… like a secondary chassis sitting atop the structural chassis.
Chrysler/Dodge, GM and Volkswagen each account for roughly 10% of Aptiv revenues, and nearly every major automaker in the world relies on Aptiv for at least a portion of its onboard wiring systems. Revenues will likely rise 10% this year, despite well-documented supply chain outages that have resulted in lowered guidance and a halving of the stock price.
Aptiv now trades at levels which have proven supportive in the past, and I think long-term risk/reward is skewed significantly to the upside, especially since the current P/E of 15x equates to the lows of 2018. As a game-changing innovator literally propelling the world forward, Aptiv is a great example of American ingenuity, and the price is right.
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.
ChargePoint 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 60%, and the company could generate positive cashflow by next year and profits by 2025. As EV penetration rises, ChargePoint’s business could grow manyfold. 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. My multiple reflects an average of other paradigm changing peers, and my sales estimate is the consensus forecast of the five analysts following the stock as reported by Bloomberg.
Plug Power Inc. (PLUG) — a leading hydrogen ecosystem enabler — has scale and first-mover advantage in the clean energy market. The firm 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, including Amazon (Which operates 10k hydrogen-powered forklifts in its warehouses).
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 $200 billion which creates a significant runway for growth, especially given the company’s scale and first-mover advantage.
