In this article, we will discuss the most promising EV battery stocks to buy now according to analysts. If you want to explore similar stocks, you can also take a look at 5 Most Promising EV Battery Stocks According to Analysts.
Investing in electric vehicle battery stocks can be an attractive choice for investors who are looking for growth opportunities. The electric vehicle (EV) industry is growing rapidly, and the technology that powers vehicles is evolving. EV battery stocks offer investors potential for both high returns and a diversified portfolio.
The EV Battery Industry: An Analysis
An industry analysis report by MarketsandMarkets estimated that the global EV battery industry was worth $56.4 billion 2022. The industry is expected to grow at a compound annual growth rate of 19.9% from 2022 to 2027 and reach a value of $134.6 billion at the end of the forecasted period.
Primary factors that are fueling the growth of the EV battery market include a surge in demand for electric vehicles and government incentives for the promotion of EVs. Electric vehicles are becoming a popular choice among consumers due to the introduction of new models, advancements in battery technology, and supportive government policies and regulations. This is in turn causing the demand for EV batteries to rise. Governments are striving to reduce the environmental impact of conventional ICE-powered automobiles by providing financial incentives such as tax exemptions, subsidies, and free charging to promote the use of EVs.
Though the cost of EV batteries has fallen substantially over the past decade, the price tag on electric vehicles still remains relatively higher than their ICE counter-parts. This is due to the expensive batteries and high manufacturing costs of electric vehicles. However, advancements in battery technology are expected to decrease the input costs and also bring down the overall price tag on electric vehicles to levels that are comparable to ICE-powered vehicles. This is expected to drive the demand for electric vehicles and in turn for EV batteries.
Two major trends further fueling the demand for electric vehicles, and in turn EV batteries, are the increase in battery swapping stations and the adoption of the Battery-as-a-Service (BaaS) model. Since EV batteries make up for a major chunk of the initial cost of the electric vehicle, companies are adopting the BaaS model that allows consumers to purchase an EV without a battery, therefore significantly reducing its initial cost. Consumers can then sign up for a battery subscription plan or lease a battery. Moreover, battery swapping stations are also gaining popularity, allowing electric vehicle owners to quickly and easily switch out their depleted batteries for a fully charged one. This reduces downtime and improves customer experience.
With the global demand for EVs projected to rise over the coming years, the demand for EV batteries is also expected to increase. Investing in EV battery stocks can help investors increase their exposure to the broader EV industry and capitalize on the favorable trends that are leading this market. Some of the most prominent players operating in the EV battery industry include Contemporary Amperex Technology Co Ltd (SHE:300750), Panasonic Holdings Corporation (OTC:PCRFY), BYD Company Limited (OTC:BYDDY), and LG Energy Solution Ltd (KRX:373220). However, this article will focus on the most promising EV battery stocks to buy according to Wall Street analysts.
Photo by Mika Baumeister on Unsplash
Our Methodology
For the purpose of this article, we focused on pure-play battery manufacturers and suppliers of battery-grade lithium. We included lithium stocks because lithium-ion batteries are the most common and popular types of EV batteries currently being used in vehicles.
After compiling a basket of stocks, we looked up each stock’s consensus rating among Wall Street analysts and their average price targets. The average price targets were calculated by taking the mean of each stock’s price targets. We then calculated the average upside potential of each stock by taking the percentage change that the average price target represents from the stock’s share price on February 10.
We narrowed down our list to stocks with positive consensus ratings and the highest average upside potential, as of February 10. We ranked ranked our picks in ascending order of their upside potential. We have also included analyst ratings, top shareholders, and the hedge fund sentiment along with our picks, where they were available.
Most Promising EV Battery Stocks According to Analysts
10. Sociedad Quimica y Minera (NYSE:SQM)
Number of Hedge Fund Holders: 34
Average Upside Potential as of February 10: 11.13%
Sociedad Quimica y Minera (NYSE:SQM) is a leading global mining and chemical company and is one of the largest producers of battery-grade lithium. The company provides lithium carbonates for the electrochemical materials in batteries as well as cathodes. This January, Deutsche Bank analyst Corinne Blanchard updated her price target on Sociedad Quimica y Minera (NYSE:SQM) to $95 from $125 and reiterated a Buy rating on the shares. Blanchard sees “near-term turbulences” for the lithium market however she is optimistic for the market in the back half of the year.
Over the past 3 months, Sociedad Quimica y Minera (NYSE:SQM) has received 2 Buy ratings and 3 Hold ratings from Wall Street analysts. The stock has a high forecast of $134 and an average forecast of $103.40, which represents an upside of 11.13% from current levels. Sociedad Quimica y Minera (NYSE:SQM) is one of analysts’ most promising EV battery stocks to buy now.
At the close of the third quarter of 2022, Sociedad Quimica y Minera (NYSE:SQM) was a part of 34 investors’ portfolios that disclosed positions worth $713.9 million in the company. As of December 31, Navellier & Associates is the top investor in the company and has a stake worth $6.66 million.
Some of the top beneficiaries of the expansion of the global EV market include Sociedad Quimica y Minera (NYSE:SQM), Contemporary Amperex Technology Co Ltd (SHE:300750), Panasonic Holdings Corporation (OTC:PCRFY), BYD Company Limited (OTC:BYDDY), and LG Energy Solution Ltd (KRX:373220).
9. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 49
Average Upside Potential as of February 10: 14.78%
Albemarle Corporation (NYSE:ALB) is an American specialty chemicals company that develops, manufactures, and markets engineered specialty chemicals worldwide. The company has three divisions: Lithium, Bromine, and Catalysts, and is a premier supplier of lithium compounds for EV batteries.
Analysts are bullish on Albemarle Corporation (NYSE:ALB) and the stock is one of the most promising EV battery stocks to buy now. Albemarle Corporation (NYSE:ALB) has a consensus Buy rating among Wall Street analysts and has an average price target of $307.94. The stock’s average price target represents an upside of 14.78% from current levels.
This January, Piper Sandler analyst Charles Neivert took coverage of Albemarle Corporation (NYSE:ALB) with an Overweight rating and a $310 price target. Neivert noted that the company is a lithium pure-play and lithium represents a major chunk of the company’s earnings upside moving forward.
At the end of Q3 2022, 49 hedge funds were long Albemarle Corporation (NYSE:ALB) and disclosed positions worth $621.45 million in the company. As of December 31, Quaero Capital is the top investor in Albermarle Corporation (NYSE:ALB) and has a stake worth $6.5 million in the company.
Here is what Carillon Tower Advisers had to say about Albemarle Corporation (NYSE:ALB) in its fourth-quarter 2022 investor letter:
“Albemarle Corporation (NYSE:ALB) is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The stock gave back some of its recent gains amid investor concerns about how the future price of lithium could be affected by a potential decelerating rate of growth in overall electric vehicle (EV) production and demand, primarily in China. Despite these potential near-term headwinds, longer-term the global lithium market remains tight, and Albemarle plays a critical role in the battery value chain and remains well-positioned for the overall continued global adoption of EVs.”
8. Livent Corporation (NYSE:LTHM)
Number of Hedge Fund Holders: 31
Average Upside Potential as of February 10: 22.70%
Livent Corporation (NYSE:LTHM) is a leading manufacturer of performance lithium compounds for use in lithium batteries, specialty polymers, and chemical synthesis applications. The company has operations across North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company offers battery-grade lithium hydroxide and also high purity lithium metal for use in batteries. As of February 10, the stock has gained 28.82% year to date.
On January 11, BofA analyst Matthew DeYoe upgraded Livent Corporation (NYSE:LTHM) to Buy from Underperform and reiterated his $26 price target on the shares. Over the past 3 months, the stock has received 4 Buy ratings and 3 Hold ratings from Wall Street analysts and has an average price target of $30, which represents an upside of 22.70% from current levels. Livent Corporation (NYSE:LTHM) is ranked among analysts’ most promising EV battery stock picks.
At the close of Q3 2022, 31 hedge funds were bullish on Livent Corporation (NYSE:LTHM) and disclosed positions worth $360.19 million in the company. As of December 31, First Eagle Investment Management is the top investor in the company and has a position worth $3.65 million.
Here is what Carillon Tower Advisers had to say about Livent Corporation (NYSE:LTHM) in its fourth-quarter 2022 investor letter:
“Livent Corporation (NYSE:LTHM) is a pure-play, fully integrated producer of performance lithium compounds. The stock underperformed amid investor concerns about how a potential decelerating rate of growth in overall electric vehicle (EV) production and demand, primarily in China, would affect the future price of lithium. Despite these potential near-term headwinds, longer-term the global lithium market remains tight, and we believe Livent plays a critical role in the battery value chain and remains well- positioned for the overall continued global adoption of EVs.”
7. Li-Cycle Holdings Corp. (NYSE:LICY)
Number of Hedge Fund Holders: 15
Average Upside Potential as of February 10: 39.37%
Li-Cycle Holdings Corp. (NYSE:LICY) is involved in the recycling and resource recovery of lithium-ion batteries in North America. The company offers a variety of battery materials for anodes and cathodes including lithium, nickel, cobalt, graphite, copper, and aluminum. As of February 10, Li-Cycle Holdings Corp. (NYSE:LICY) has gained 21.61% year to date.
On January 31, Baird analyst Ben Kallo updated his price target on Li-Cycle Holdings Corp. (NYSE:LICY) to $7 from $8 and maintained a Neutral rating on the shares.
Li-Cycle Holdings Corp. (NYSE:LICY) has a consensus Buy rating among Wall Street analysts and an average price target of $8. Over the past 3 months, the stock has received 4 Buy ratings and 1 Hold rating from Wall Street analysts and has a high forecast of $10. The stock’s average price target represents an upside of 39.37% from current levels. Li-Cycle Holdings Corp. (NYSE:LICY) is one of the most promising EV battery stocks to buy now according to analysts.
At the end of Q3 2022, Li-Cycle Holdings Corp. (NYSE:LICY) was spotted on 15 investors’ portfolios that disclosed positions worth $95.75 million in the company. As of December 31, Bailard Inc is the most prominent shareholder in the company and owns over 195,000 shares of the company.
6. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 14
Average Upside Potential as of February 10: 46.31%
Lithium Americas Corp. (NYSE:LAC) is a leading North American lithium mining company. The company has operations in the United States and Argentina. The company explores for lithium deposits and has already come to the attention of auto giant General Motors Company (NYSE:GM). On January 31, the company announced a collaboration with General Motors Company (NYSE:GM) to develop its Thacker Pass project in Nevada. General Motors Company (NYSE:GM) is investing $650 million in the Thacker Pass project which is estimated to support the production of battery raw materials for one million electric vehicles per year.
Analysts see significant upside to Lithium Americas Corp. (NYSE:LAC). This February, B. Riley analyst Matthew Key raised his price target on Lithium Americas Corp. (NYSE:LAC) to $40 from $39 and maintained a Buy rating on the shares. Over the past 3 months, the stock has received 6 Buy ratings from Wall Street analysts and has an average price target of $35.92, which represents a potential upside of 46.31% from current levels. Lithium Americas Corp. (NYSE:LAC) is ranked among the most promising EV battery stocks according to analysts.
At the close of the third quarter of 2022, Lithium Americas Corp. (NYSE:LAC) was a part of 14 investors’ portfolios. The total stakes of these hedge funds amounted to $172.3 million in the company. As of December 31, IvyRock Asset Management is the top shareholder in the company and has a position worth $7.68 million.
Some of the world’s biggest EV battery manufacturers include Contemporary Amperex Technology Co Ltd (SHE:300750), Panasonic Holdings Corporation (OTC:PCRFY), BYD Company Limited (OTC:BYDDY), and LG Energy Solution Ltd (KRX:373220).
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Disclosure: None. 10 Most Promising EV Battery Stocks According to Analysts is originally published on Insider Monkey.
