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EVGO Stock: Positive Developments Will Keep EVgo Stock Fully Charged

  • EVgo (EVGO) signed another partnership agreement, this time with a well-known retail bank.
  • A recent analyst note also highlights some data that could signal strong profitability going forward.
  • If you’re looking for a promising electric vehicle (EV) game, it’s not too late to buy it.

Source: various photographs / Shutterstock.com

Over the past two months, shares of EVgo (NASDAQ:EVGO) stock have been on a tear. Since February, EVGO stock has gone from a low of $7 per share to its current price of around $12.50 per share. After his incredible run, however, will his battery soon run out?

In my opinion, the battery life of the stock EVGO is long term. Although it’s leveled off a bit recently, there’s now even more to suggest that this EV charging company will become a leader in the field.

For example, after having already entered into several key partnerships, it recently concluded another such agreement. However, that’s not all. A recent bullish analyst note highlights some data that signals high profitability ahead.

Of course, this start-up company still has a lot to prove. In addition, much of its potential has already been priced into its share price. But, if you’re optimistic about the rise of electric vehicles, it’s not too late to buy EVGO stock.

EVGO Stock and the latest partnership news

In past coverage of EVgo, I reviewed the many partnership deals this EV charging station provider has entered into. These include agreements with traditional automakers and fleet owners. Additionally, the company has also made deals with physical businesses to operate its machine at their locations.

Speaking of which, the company recently signed such an agreement with a well-known retail bank. Like InvestorPlace.com William White reported on April 8 that EVgo will set up charging stations at 50 of that bank’s outlets. This may seem like a lot, especially since this DC Fast Charging (DCFC) terminal operator has already 850 in operation.

Yet, little by little, this EV infrastructure provider is establishing itself as a top name in this space. And as it continues to sign these types of deals, the company becomes more and more likely to meet its long-term revenue projections.

Now the question is whether it can achieve high margins when it fully expands. We won’t know for sure for a few years. That said, however, we have data that may indicate that achieving high margins will not be a problem.

What the recent analyst note tells us

The expectation of EVgo becoming multi-billion dollar is what allows EVGO stock to support its current valuation of a market capitalization of $3.3 billion. But ultimately, it will also have to generate the revenue necessary to sustain (and grow) it.

These days, when high-growth companies with no revenue are falling out of favor, I can understand why you might be hesitant to dive into such a name. Many companies that have gone public with the Special Purpose Acquisition Company (SPAC) route like this have touted high margins within a few years. That said, only time will tell if these projections come to fruition.

In the case of EVgo, however, we may have indications that at scale it will be a business with high operating margins. How? In a “Buy” note on the stock of Evercore ISI James West, the sell-side analyst, noted something that hints at this company’s future profitability. Company-wide, it still runs in the red. Yet in a market where it already has hundreds of chargers in operation in San Francisco, it generates serious positive cash flow.

According to figures from West, EVgo’s operations in San Francisco are operating with a cash margin of 43.3%. And similar trends are playing out in other markets, including Los Angeles, Phoenix, Arizona and Portland, Oregon.

The verdict on EVGO stock

Overall, the recent news further strengthens the bullish case for EVgo. By expanding its presence through partnership agreements, it becomes increasingly likely to meet past revenue expectations.

More importantly, based on cash flow from its San Francisco operations, there is now substance to past assertions that over time it will become a high-margin business. Again, after its big rise, much of that is already priced into its stock price.

In the short term, stocks may continue to pull back a bit. Unexpected bad news could temporarily cause a return to single digits. The same goes for the take-profits of traders who approached its bottom.

That said, if you’re optimistic about the rise of electric vehicles, it’s not too late to buy EVGO stock. And if it continues to perform and deliver as it has recently, expect stocks to maintain a full charge.

EVGO stock gets a “B” grade in my portfolio binder.

As of the date of publication, neither Louis Navellier nor the member of the InvestorPlace research staff principally responsible for this article holds (directly or indirectly) any position in the securities mentioned in this article.

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