Those looking for a ‘picks and shovels’ play for the electric vehicle boom could do worse than ASX-listed shares of Rectifier Technologies Limited (ASX: RFT). Founded in 1992, the company designs and manufactures high-efficiency power rectifiers — a critical component of electric vehicle (EV) chargers. As of the most recent half, the electric vehicle segment delivered 70% of revenue following a spike of 634%.

Rectifier technologies is a profitable business with a recently expanded manufacturing capacity and, following a period of substantial R&D investment, has rolled out several new and innovative products. Importantly, the company has existing relationships with major industry players such as Tritium and Efacec.

According to a recent market research report, the electric vehicle charging stations market is expected to grow from US$5.3 billion in 2018 to US$30.41 billion by 2023; representing average annual growth of over 40%. Key factors such as government funding, subsidies, and incentives, growing demand for electric vehicles, growing concern toward environmental pollution, and heavy investment from automakers of EVs are driving the electric vehicle charging stations market.

Rectifier Technology shares have doubled in the past 12-months on the back of rapidly improving financials. Although the company hasn’t provided guidance for FY2019, a solid first half suggest net profit could come in around $2.5 million for the full year. That puts shares on a forward P/E of around 27.

In the context of a company that is likely to more than double sales in the current year, and that has a strong wind at its back, many in the Strawman community regard shares as undervalued. Indeed, Rectifier Technologies is ranked #6 on Strawman.

The author may hold positions in the stocks mentioned in this publication, at the time of writing. The information contained in the publication and the links shared are general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.