Beam Global: An Under the Radar Play on Electric Vehicles

In the electric vehicle (EV) space, companies like Tesla, Nikola, and NIO garner much of the market's attention due their massive growth potential as automakers. Then there are some smaller, lesser-known players that stand ready to grab a meaningful slice of the EV pie.

San Diego-based Beam Global (NYSE:BEEM), a play on EV charging infrastructure, has the potential to charge up investors' portfolios. Let's take a peek under the hood.

What Does Beam Global Do?

Beam Global recently changed its name from Envision Solar International (and previously traded under the ticker EVSI). The rebranded Beam is a tiny $93 million market cap company that makes various solar-powered products.

Its most prominent business is EV charging stations, but it also provides technology solutions for energy security, disaster preparedness, and outdoor media.

Beam's role in the global push towards clean mobility is to offer cost-effective EV fleet charging stations. The main difference with Beam's products is that they are solar versus electric.

Its older, Solar Tree products are for the large-scale charging of medium and heavy-duty vehicle fleets. But the more intriguing product and biggest growth opportunity is the EV ARC 2020 solar-powered EV station for the mass charging infrastructure of smaller vehicle fleets.

The EV ARC charger is differentiated in the market based on how fast it can be deployed. It requires minutes to setup when many electricity-dependent offerings can take months. With EV ARC there isn't a need to obtain permits and construction crews. And without any electrical work involved, customers don't get a utility bill. This gives the Beam solution a low total cost of ownership (TCO) and makes it an appealing value proposition for fleet managers.

Once setup, Beam's units are good to go with a pre-mounted charger brand of the customer's choosing. Each station can charge as many as six EVs at a time. And without a reliance on the electrical grid, EV ARC can charge vehicles day or night even during bad weather and power outages.

Who are Beam Global's Customers?

Beam's customer base includes an impressive list of municipalities, education institutions, and public corporations. Google, Johnson & Johnson, and Pfizer are a few examples.

But most of the demand has thus far come from U.S. cities and universities. Given the challenges of putting EV charging stations in downtown locations, EV ARC has been viewed as a good solution for urban agencies. This was the impetus behind the City of Atlanta's Department of Watershed Management's decision to choose the EV ARC.

Lately more customer wins have been piling up. Last month, Beam announced its first order of the EV ARC from Baltimore Gas & Electric.  This was followed by an order from the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) who tapped the EV ARC to charge the EVs, hybrids, and global electric motorcars (GEMs) used in its fleet operations.

Earlier this month, Beam announced that "a federally funded research and development center" ordered four EV ARC products to charge the EV and neighborhood electric vehicles (NEV) used in its fleet operations and by employees.

Despite the solid order flow, Beam Global is still operating at net loss. But profitability is likely only a few years away. Sales have grown at a 26% rate over the last five years and the company's gross margin is 3.8%. Earnings per share have been up in each of the last four quarters in a range of 23.8% to 42.9%.

Is Beam Global a Buy?

In addition to the interesting fundamental story, Beam Global looks good from a technical perspective. Momentum is in certainly in the stock's favor after a 138% run over last 12 months.

In the near-term, Beam may be headed to the $18.75 to $19.75 range based on a symmetrical continuation triangle pattern that emerged on September 1st. The bullish intermediate event signaled the stock's breakout from a consolidation. It points to the possibility that Beam may have as much as 45% upside in the weeks ahead.

Investors, should, however, be aware that Beam had a 1-for-50 reverse split in April 2019. So, we are talking about a penny stock in disguise that without the reverse split would be trading around 27 cents per share.

The stock is definitely speculative in nature, but the risk-reward seems favorable given the customer momentum and chance for the company to grow into the electric vehicle market.

With the stock trading around $13.50, the potential return appears worth the volatility. All three analysts covering the stock have buy ratings with price targets ranging from $17 to $30.

The stock also caught the intention of well-regarded hedge fund Hussman Strategic Advisors which initiated a 2,500-share position in Q2 at approximately $9.97 per share.

The global push towards clean energy is still in the early stages, so the road ahead for EV companies is long. While the big vehicle makers grab most of the headlines, Beam may eventually emerge as a significant beneficiary of demand for charging infrastructure. Investors may want to 'beam up' some shares into their portfolios.