August 18, 2022, Ford Motor Company (NYSE:F) and ChargePoint Holdings, Inc. (NYSE:CHPT)
With the newly passed Inflation Reduction Act bolstering EV stocks, these under-$20 plays are cheap ways to chase the rush as the best stocks to buy now.
Although market momentum stalled on Wednesday (August 17, 2022) for the Dow and S&P, high-growth stocks had a good day, with the Nasdaq rising 1.14%. Following the official passing of the Inflation Reduction Act and keeping with the theme of EV stocks scorching, names like Ford Motor Company (NYSE:F) and ChargePoint Holdings, Inc. (NYSE:CHPT) look like the best stocks to buy now.
Both could be the best and cheapest ways to invest in an EV industry worth potentially $46 trillion by 2050, or sooner, thanks to this Inflation Reduction Act.
Both stocks also offer exposure to different angles of the EV industry. Ford is a long-time prominent automaker that’s reinvented itself into arguably the fastest-rising disruptor in the EV industry. ChargePoint is building an EV charging network throughout the U.S. and Europe while offering a cloud-based subscription model with various hardware and software products.
Never has it been easier to own an EV than today, and the red-hot performance of both stocks indicates that. Many analysts still see between 40%-50% of upside too.
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With climate change increasingly becoming an emergency threatening humanity, the near-term and long-term upside is colossal for these stocks. With roughly half of the $700 billion Inflation Reduction Act dedicated to clean energy initiatives, including the extension of EV tax credits, F and CHPT offer unique characteristics as the best stocks to buy now.
Ford Motor Company (NYSE:F)
With the Inflation Reduction Act, Benchmark now sees a 43.57% upside as this prominent automaker evolves into a pure EV play.
Would you believe Ford, the original American automaker and brand behind the Model-T, has evolved into a pure EV play? Perhaps it shouldn’t come as such a shock. Ford has been a pioneer and innovator ever since its inception in 1903.
Ford has gone all-in on its EV initiatives and carbon neutrality goals and is tailor-made to benefit from the Inflation Reduction Act.
Although last year it projected half of its vehicles to be electric by 2030, its latest moves indicate that it’s way ahead of schedule.
A Better and Cheaper EV Play Than Tesla?
Ford will have a business segment dedicated to EVs called ‘Ford Model e’ by this time next year. However, its F-150 Lightning pickup truck, Mustang Mach-E sports coupe, and E-Transit delivery van are already crushing it. E-Transit has become one of the most popular full-size electric vans in the U.S. and is gaining a foothold in Europe. AAA also named the Mustang Mach-E Premium ‘Best Overall Car’ for 2022.
Coupled with deals with Chinese battery maker CATL and mining giant Rio Tinto, Ford projects that it could build 600,000 EVs annually by late 2023 and more than 2 million by the end of 2026. Ford also expects the CAGR for EVs to top 90% through 2026, more than double consensus industry estimates.
Ford recently signed the largest renewable energy purchase from a utility in U.S. history with DTE Energy. Under the agreement, by 2025, every Ford facility in Michigan will be powered by clean energy, and 100% carbon-free electricity will power the assembly of every Ford vehicle manufactured in Michigan. This carbon-free initiative is occurring 10 years earlier than expected.
DTE will also add 650 megawatts of new solar energy capacity in Michigan for Ford by 2025 and will increase the total amount of installed solar in Michigan by nearly 70%.
Tesla gets much recognition as a top EV player, but Ford is rapidly closing in. It also doesn’t trade for around $1,000 a share. With Ford, you’re getting a stock that still offers deep value -38.04% below its highs despite surging over 50% since July 5, 2022’s lows.
Since the market closed on July 5, 2022, it’s also outperformed Tesla by nearly 15%.
Ford offers long-term excellence and EV-related upside. However, several other reasons make it one of the best stocks to buy now.
Blowing Past Earnings Estimates With Breathtaking Growth
Ford reported Q2 earnings on July 27, 2022, and blew past Wall Street estimates.
The Company reported $0.68 EPS for the quarter, beating analysts’ consensus estimates of $0.44 by $0.24. Most importantly, this marked a jaw-dropping 423.08% increase from Q2 2021’s $0.13 EPS. Ford also saw $37.91 billion of quarterly revenue, beating analyst estimates of $35.17 billion and marking a 57.1% year-over-year increase.
Ford’s Deep Value and Strong Fundamentals Remain Intact
Ford has a long track record of fundamental stability and deep value. It has kept its head above water during two World Wars, the Great Depression, 1970s stagflation, the financial crisis, and COVID. In fact, during the financial crisis, while all the big U.S. automakers received bailouts, Ford was the only one to avoid bankruptcy.
Ford’s stock is on fire, yet there is more meat behind its bones than other speculative EV plays.
First of all, despite its seven-week breakout, Ford remains ridiculously cheap. Its valuation multiples are mouth-watering.
- 5.6x trailing P/E
- 7.7x forward P/E
- 0.02 PEG ratio
- 1.3x Price/Book
- 0.4x trailing Price/Sales
- 0.6x forward Price/Sales
Its valuation also implies a robust 9.2% free cash flow yield.
Ford also scored a nearly perfect 8 out of 9 Piotroski Score, which indicates healthy Liquid Balance Sheets, Profitability, and Operating Efficiency.
Moreover, Ford’s 12-month 29.6% ROCE indicates that it generates a healthy return on its common equity’s book value, while its 12.2% gross margin and 7.8% operating margin are also solid.
You can’t discuss Ford’s outstanding value and fundamentals without raving about its shareholder yield. Its 29.8% shareholder yield is absurdly generous and something that alone makes it one of the best stocks to buy now. Comprising this yield is also an outstanding 3.65% dividend yield.
A Technical BUY
From a technical perspective, Barchart spots several indicators making Ford one of the best stocks to buy now. It notes that the stock has broken past all its support levels and has some room left before touching resistance points.
It also spots the following short-, medium-, long-term indicators as BUY signals.
- 20 Day Moving Average
- 20 – 50 Day MACD Oscillator
- 20 – 100 Day MACD Oscillator
- 50 Day Moving Average
- 100 Day Moving Average
- 150 Day Moving Average
Ford’s Latest Price Target Points to a 43.5+% Upside
Although TipRanks data indicates that Ford’s upside could be tapped out, recent analyst activity says otherwise. Benchmark was the most recent analyst to give Ford a price target (August 9, 2022) and gave it a street-high target of $23.00. This price target represents a 43.57% upside from August 17, 2022’s closing price of $16.02.
Due to the imminent catalysts mentioned above, long-term outperformance, and great fundamentals, Ford’s low price target of $10.00 and its average price target of $16.03 are irrelevant. It has evolved and innovated itself into a pure EV play and looks like one of if not the best stock to buy now.
F’s year-to-date low and high are $10.61 and $25.57, respectively.
ChargePoint Holdings, Inc. (NYSE:CHPT)
This provider of a long-awaited EV charging network has seen its stock nearly double since May and still could have a 50+% upside.
Even before the Inflation Reduction Act was a thing, President Biden pledged to make half of new U.S. automobiles electric by 2030.
Yet something is missing for that to happen. A widespread EV charging network akin to gas stations.
That’s precisely where ChargePoint Holdings comes into play.
Although ChargePoint Holdings is a more speculative play on the EV boom and is not yet profitable, it is one of the best stocks to buy now because it’s a leading EV charging network operator. It already boasts hundreds of thousands of charging locations across North America and Europe, with 113 million charging sessions occurring thus far.
What makes ChargePoint so unique is its cloud-based subscription model. Besides enabling ChargePoint account holders to recharge EVs at set locations, ChargePoint provides a suite of hardware and software products that allow them to charge EVs from the comfort of their home, work, or wherever they want.
Thanks to companies like ChargePoint, it’s never been easier or more convenient to own an EV.
But, if we’re talking about the stock itself, it’s seen momentum even before the Inflation Reduction Act. The stock has nearly doubled since its lows of $8.50 in mid-May and is closing in on its first three-month win streak since 2020.
Many investors also appear to see it as one of the best stocks to buy now, as short interest in the stock has recently plummeted by 6.27%.
A Breakneck Pace Towards Profitability
ChargePoint will report its Q2 results in about two weeks (August 30, 2022). Although the Company is not yet profitable, investors will certainly be satisfied if it can even sniff last quarter’s 102% year-over-year revenue growth. Last quarter, CHPT also beat top-line analyst estimates by 8.7%, with revenue coming in at $81.63 million compared to consensus projections of $75.10 million.
ChargePoint’s net income is poised to grow 15.5%. Its positioning in the global EV charging stations market, that’s projected to grow from $17.59 Billion in 2021 to $111.90 Billion by 2028 at a 30.26% CAGR, could send it to profitability sooner than expected.
A Strong Balance Sheet Bolstered By Imminent Catalysts
ChargePoint holds more cash than debt on its balance sheet and has many exciting projects.
Earlier this month, ChargePoint, Volvo, and Starbucks finalized a network of as many as 15 Starbucks locations between Denver and Seattle that would have ChargePoint EV charging stations. Volvo drivers at these locations would receive free or reduced rates.
With the Inflation Reduction Act providing enticing tax credits and investments to EV producers and consumers, the growth of its subscription service could also become its most attractive long-term recurring revenue stream.
Its 20.0% gross margin doesn’t hurt either.
Some Analysts See the Stock With a 50+% Upside
Analysts are increasingly warming up to ChargePoint’s upside. The last four to slap a price target on CHPT see an upside ranging from 18%-54+% from August 17, 2022’s $16.88 closing price.
- Stifel Nicolaus- $26.00
- B. Riley- $20.00
- DA Davidson- $20.00
- Evercore ISI- $24.00
TipRanks also notes that 12 Wall Street analysts offered 12-month price targets for ChargePoint Holdings in the last 3 months. Stifel Nicolaus’s $26.00 price target currently sits as CHPT’s street-high. The stock also has a low price target of $12.00 and an average of $19.13, representing a 13.33% upside from August 17, 2022’s close.
CHPT’s year-to-date low and high are $8.50 and $20.99, respectively.