Investing

EV Charging Station Growth Could Be Huge for 8 Top Stocks

Suppliers

Amphenol Corp. (NYSE: APH) is a top pick and has remained a long-term favorite on Wall Street and at Jefferies for years. It is one of the world’s largest designers, manufacturers and marketers of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products and coaxial and high-speed specialty cable.

While it is somewhat lesser known, TE Connectivity Ltd. (NYSE: TEL) is also a top pick at Jefferies. It is the world’s largest maker of passive electronic components (75% of sales) led by a leading share (20% to 25%) in connectors (50% of sales). The company’s biggest served markets have longer cycles, such as auto (30% of sales) and telecom equipment (19% of sales). TE Connectivity also produces components for telecom and energy networks (14% of sales) that protect/connect cabling.

The analysts noted this about the two companies’ prospects:

Connector suppliers Amphenol and TE Connectivity are each well positioned to benefit from content tied to the charger as well as the cable that connects to the vehicle. Although the number of SKUs are diverse, connectors electrically & mechanically join wires, cables, and circuit boards and play an important role in charging infrastructure given cable, resistor, and relay demands (as well as related current sensors). Buy-rated TE Connectivity is the global leader in connectors, particularly in autos (39% share), while Buy-rated Amphenol is more diversified with no one end market responsible for more than 20% share of revenue. Both suppliers should be clear beneficiaries of an EV charging ramp, including potential average selling price expansion from DC Fast Chargers, as higher voltage typically demands larger connectors. For more details on the current industry landscape, please see our latest recap of global connector sales & order data.

Jefferies has an $80 price target on Amphenol, which compares with the lower $74.64 consensus target and Wednesday’s close at $68.41 The firm has a $160 target on TE Connectivity, well above the $146.47 consensus target and latest close at $135.21 a share.

Littelfuse Inc. (NASDAQ: LFUS) is an off-the-radar play that also offers interesting upside potential. It manufactures and sells circuit protection, power control and sensing products in the Asia-Pacific, the Americas and Europe. Its Automotive segment provides blade, resettable and high-current and high-voltage fuses, as well as battery cable protectors for hybrid and electric vehicles. It offers fuses, switches, relays and power distribution modules for commercial vehicles, as well as automotive sensor products to monitor passenger compartment occupants. This segment serves original equipment manufacturers, tier-I suppliers, and parts distributors in the passenger car, heavy-duty truck, off-road vehicles material handling, agricultural, construction and other commercial vehicle end markets.

The analysts said this:

Among the supplier universe, we believe circuit protection, power control, and sensing supplier LFUS will likely be the biggest beneficiary of ramping charging build-out. As the industry leader in circuit protection, Buy-rated LFUS’ products help prevent electronics from being damaged by spikes in electrostatic discharge. Notably, LFUS is particularly well positioned in DC Fast Chargers. Although complexity, and therefore content, varies depending on charging level, we estimate LFUS’ content opportunity in a DC Fast Charger is nearly 5x the content within an EV itself. Put simply, higher voltage equates to increased circuit protection demand.

The $325 Jefferies price target is well above the $294.17 consensus target Wednesday’s closing trade was reported at $254.79 a share.

Charging Providers

Off-the-radar company ChargePoint Holdings Inc. (NYSE: CHPT) could be one of the very best ideas in the EV charging arena. It provides charging networks and charging solutions in the United States and offers a portfolio of hardware, software and services for commercial, fleet and residential customers.

Jefferies is very positive on ChargePoint:

In conjunction with today’s note, we initiate on Chargepoint with a Buy rating. As the US charging infrastructure leader, we see the company as uniquely positioned to leverage scale and integrated hardware, software, and services features to drive a +59% sales compounded annual growth rate through fiscal year 2026 (5-year). The is the dominant charging provider with 59% networked US share (70% ex-Tesla) and +5,000 customers across commercial, fleet, and residential end markets. In addition, we expect compounding same-customer hardware volumes alongside.

The analysts have set a $40 price target. The consensus target is lower at $37.50, and the stock was last seen trading at $34.74 a share.

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