When Should You Buy ChargePoint Holdings, Inc. (NYSE:CHPT)?

By
Simply Wall St
Published
March 22, 2022
NYSE:CHPT
Source: Shutterstock

While ChargePoint Holdings, Inc. (NYSE:CHPT) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price increase on the NYSE over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on ChargePoint Holdings’s outlook and valuation to see if the opportunity still exists.

View our latest analysis for ChargePoint Holdings

What's the opportunity in ChargePoint Holdings?

The stock is currently trading at US$18.13 on the share market, which means it is overvalued by 29% compared to my intrinsic value of $14.06. This means that the buying opportunity has probably disappeared for now. But, is there another opportunity to buy low in the future? Given that ChargePoint Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of ChargePoint Holdings look like?

earnings-and-revenue-growth
NYSE:CHPT Earnings and Revenue Growth March 22nd 2022

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 85% over the next couple of years, the future seems bright for ChargePoint Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? CHPT’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe CHPT should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on CHPT for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for CHPT, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into ChargePoint Holdings, you'd also look into what risks it is currently facing. While conducting our analysis, we found that ChargePoint Holdings has 4 warning signs and it would be unwise to ignore these.

If you are no longer interested in ChargePoint Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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