Whether you see them or not, industrials businesses play a crucial part in our daily activities. Still, their generally high capital requirements expose them to the ups and downs of economic cycles, and the industry’s six-month return of 8.6% has fallen short of the S&P 500’s 11.3% rise.
A cautious approach is imperative when dabbling in these companies as the losers can be left for dead when the cycle naturally turns and the winners consolidate. Taking that into account, here are three industrials stocks we’re passing on.
ChargePoint (CHPT)
Market Cap: $309.4 million
The most prominent EV charging company during the COVID bull market, ChargePoint (NYSE: CHPT) is a provider of electric vehicle charging technology solutions in North America and Europe.
Why Do We Think Twice About CHPT?
- Sales trends were unexciting over the last two years as its 4.3% annual growth was below the typical industrials company
- Cash-burning history makes us doubt the long-term viability of its business model
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
ChargePoint’s stock price of $0.70 implies a valuation ratio of 0.7x forward price-to-sales. If you’re considering CHPT for your portfolio, see our FREE research report to learn more.
EVgo (EVGO)
Market Cap: $306.9 million
Created through a settlement between NRG Energy and the California Public Utilities Commission, EVgo (NASDAQ: EVGO) is a provider of electric vehicle charging solutions, operating fast charging stations across the United States.
Why Are We Hesitant About EVGO?
- Earnings per share fell by 47% annually over the last two years while its revenue grew, partly because it diluted shareholders
- Cash burn raises the question of whether it can sustainably grow over the long term
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $2.90 per share, EVgo trades at 1x forward price-to-sales. Read our free research report to see why you should think twice about including EVGO in your portfolio.
Blink Charging (BLNK)
Market Cap: $108.3 million
One of the first EV charging companies to go public, Blink Charging (NASDAQ: BLNK) is a manufacturer, owner, operator, and provider of electric vehicle charging equipment and networked EV charging services.
Why Are We Cautious About BLNK?
- Revenue growth over the past five years was nullified by the company’s new share issuances as its earnings per share fell by 11.3% annually
- Cash-burning tendencies make us wonder if it can reliably generate shareholder value
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
Blink Charging is trading at $1.07 per share, or 0.8x forward price-to-sales. If you’re considering BLNK for your portfolio, see our FREE research report to learn more.
Stocks We Like More
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