12 Best Lithium and Battery Stocks To Buy

Published on August 30, 2022 at 8:51 am by Affan Mir in Hedge Funds, News

In this article, we discuss the 12 best lithium and battery stocks to buy. To skip the detailed analysis of the lithium and battery market, go to 5 Best Lithium and Battery Stocks To Buy.

The demand for lithium has been growing rapidly since the adoption of electric vehicles and grid-scale lithium-ion batteries for energy storage. According to GlobalData, the demand for lithium is expected to surpass 100 thousand tonnes in 2023. Currently, the top three lithium mining countries are Australia, Argentina, and Chile. These three countries produced 87% of the global lithium in 2021.

In 2021, the global lithium market was worth $3.83 billion, which is expected to reach $6.68 billion in 2028 at a CAGR of 8.1%. The main driving factor of lithium demand is the EVs. In December 2021, China’s EV sales reached a record of 502,545 units, representing a YoY growth of 125%. During the same period, BMW delivered 97,000 electric cars, up by 29.6% year on year. Furthermore, due to the high EV demand, S&P expects the global production of lithium to grow by 55% at the end of 2022, compared to the 2020 levels.

Lithium-Ion Battery Market and EVs

The lithium-ion batteries are not only used in electric vehicles but also in consumer electronics, integration of renewable energy with grid technology, telecommunication, and aerospace due to their lightweight, high energy density, and ability to recharge. In 2021, the consumer electronics segment held the highest revenue share of 40%. The lithium-ion battery market size was $36.9 billion in 2020 and is expected to reach $193.13 billion at a CAGR of 23.3% between 2021 and 2028.

Automotive companies are working towards capturing a higher market share in the electric vehicle market. In 2021, Tesla, Inc. (NASDAQ:TSLA) accounted for 79% of all the EVs registered in the U.S. and still holds around 70% of the total market share. It is followed by Nissan at a meagre 8.51%. Furthermore, Ford Motor Company (NYSE:F) expects to spend $5 billion on electric vehicles in 2022 and is looking to inject another $50 billion CAPEX through 2026. The company expects a CAGR of 90% for its EV models. Other legacy automakers such as General Motors (NYSE:GM), Volkswagen, and Toyota have also announced plans to take a bite out of the electric vehicle market share.

Inflation Reduction Act

Around mid-August, the US senate voted to pass the Inflation Reduction Act, which includes funding of $400 billion over a decade for climate and energy-related programs. Out of the $400 billion, $369 billion will go towards domestic manufacturing of electric vehicles, clean energy technologies, and making buildings energy efficient. For EVs, the act includes a $7,500 tax credit at POS for new vehicles and $4000 for used ones. The tax credit will be applied to electric and hybrid vehicles manufactured in North America, which meet the minimum battery capacity requirements of 5 kilowatt-hours.

Tesla, Inc. (NASDAQ:TSLA), Albemarle Corporation (NYSE:ALB), and Johnson Controls International plc (NYSE:JCI) are some of the most notable names in the lithium and battery sector.

12 Best Lithium and Battery Stocks To Buy

Photo by Kumpan Electric on Unsplash

Our Methodology
After a careful assessment of the lithium and battery market, we picked these stocks based on their fundamentals, future growth catalysts, and optimistic analyst ratings. All of these stocks are listed either on NYSE or NASDAQ. To rank the list, we used the hedge fund sentiment around each stock, which has been gauged from the Insider Monkey database of 895 elite hedge funds as of the second quarter of 2022.

Best Lithium and Battery Stocks To Buy

12. Sigma Lithium Corporation (NASDAQ:SGML)

Number of Hedge Fund Holders: 3

Sigma Lithium Corporation (NASDAQ:SGML) is a Brazilian company that explores and develops lithium deposits. In May, Sigma Lithium Corporation (NASDAQ:SGML) announced that its Grota do Cirilo mining project is valued at $5.1 billion. The company further added that it is fully funded for Phase 1 production and remains on schedule to begin commissioning at the end of 2022. The company management expects that the project will produce 531,000 tpa of battery-grade sustainable lithium during the 13-year project life. It is set to make Sigma Lithium Corporation (NASDAQ:SGML) the fourth largest lithium producer in the world.

In late June, National Bank analyst Lola Aganga reaffirmed an Outperform rating on Sigma Lithium Corporation (NASDAQ:SGML) and raised the price target on the shares to $27 from $26.

Sigma Lithium Corporation (NASDAQ:SGML) is a prominent lithium and battery stock along with Tesla, Inc. (NASDAQ:TSLA), Albemarle Corporation (NYSE:ALB), and Johnson Controls International plc (NYSE:JCI).

11. Lithium Americas Corp. (NYSE:LAC)

Number of Hedge Fund Holders: 9

Lithium Americas Corp. (NYSE:LAC) is a Canadian company that explores lithium deposits. As of August 29, the stock has returned about 47% to its shareholders over the past year.

Lithium Americas Corp. (NYSE:LAC) owns almost 49% of the Cauchari-Olaroz lithium brine project in Argentina and will start commissioning in the latter half of 2022. According to a Feasibility Study and Mineral Reserve Estimate, the project has the potential to produce 40,000 tonnes of battery-grade lithium carbonate for 40 years. Looking at the long-term lithium bicarbonate forecast price of $12,000 per tonne, the Cauchari project is expected to generate around $300 million in average EBITDA, annually.

On July 22, Canaccord analyst Katie Lachapelle maintained a Buy rating on Lithium Americas Corp. (NYSE:LAC) and lowered the price target from C$50 to C$49.

10. Piedmont Lithium Inc. (NASDAQ:PLL)

Number of Hedge Fund Holders: 11

Piedmont Lithium Inc. (NASDAQ:PLL) is a pre-production mining company that has a few stock holdings in minor mining companies and is on its way to starting its own mine in North Carolina.

Piedmont Lithium Inc. (NASDAQ:PLL) is on the list due to its future growth catalysts and current holdings in Sayona Mining and Atlantic Lithium. The company owns 100% of its under-development Carolina mining plant and LHP-2. From the Carolina plant, the company aims to extract 242 ktpa of spodumene concentrate and has a total expected resource size of 44.2 Mt. The project’s current CAPEX is projected at $988 million. The net present value using a discount rate of 8% and internal rate of return is recorded at $2.8 billion. Furthermore, Piedmont Lithium Inc. (NASDAQ:PLL)’s stake in Sayona Quebec Inc. is 25%, which will deliver its first SC6 in Q1 2023.

On June 22, Cowen analyst David Deckelbaum called Piedmont Lithium Inc. (NASDAQ:PLL) “a best small mid-cap, catalyst rich name and a North American lithium growth story”, The analyst believes that the stock is under-appreciated and reaffirmed his Outperform rating and $90 price target.

9. Li-Cycle Holdings Corp. (NYSE:LICY)

Number of Hedge Fund Holders: 15

Li-Cycle Holdings Corp. (NYSE:LICY) is a lithium-ion battery recycling company that also engages in lithium-ion battery resource recovery. On June 27, the company was added to the small-cap Russell 2000 Index and the broad-market Russell 3000 Index.

Li-Cycle Holdings Corp. (NYSE:LICY) has been well funded for its pipeline projects through long-term commercial agreements with companies such as Glencore and LG Energy Solution. Both of the companies provided combined investments of $250 million to the company, bringing the cash balance of the company to around $761 million. Furthermore, by early June, the company’s addressable market for lithium-ion batteries that are available for recycling made a leap of 170% in North America and 330% in Europe, as compared to December 2021 levels.

On June 15, Cowen analyst Jeffrey Osborne maintained an Outperform rating on Li-Cycle Holdings Corp. (NYSE:LICY) shares and lowered the price target to $10 from $14.

8. FREYR Battery (NYSE:FREY)

Number of Hedge Fund Holders: 16

FREYR Battery (NYSE:FREY) produces lithium-ion batteries for stationary energy storage, electric vehicles, and marine applications. Based on favourable expectations of supply and demand, FREYR Battery (NYSE:FREY) has increased the capacity target to 50 GWh by 2025, over 100 GWh by 2028, and 200 GWh by 2030. The outlook was provided on the same day the company reported its Q2 earnings. In the second quarter, the company posted a net income of $4.7 million, compared to a net loss of $34.9 million in the previous quarter. The company exited the June quarter with cash and cash equivalents, and restricted cash of $488.4 million.

On August 24, Goldman Sachs analyst Philipp Konig upgraded FREYR Battery (NYSE:FREY)’s shares to Buy from Neutral and raised the price target to $19 from $11. The analyst told investors that the company is expected to be a strong beneficiary of the recent Inflation Reduction Act.

Our hedge fund data shows that 16 hedge funds had a stake in FREYR Battery (NYSE:FREY), valued at $205.27 million at the end of Q2 2022. The largest position was held by Sylebra Capital Management, with 12.49 million shares worth $85.43 million.

7. EnerSys (NYSE:ENS)

Number of Hedge Fund Holders: 20

EnerSys (NYSE:ENS) is a Pennsylvania-based stored energy systems manufacturer. It is among the world’s largest industrial battery manufacturers. On August 10, EnerSys (NYSE:ENS) reported an EPS of $1.15, in line with Street consensus. The revenue of $899 million, however, missed the consensus estimate of $906.64 million. Due to a seasonally slow quarter, the company expects its next quarter’s EPS to be $1.05 to $1.15, while the consensus stands at $1.23.

As of August 29, EnerSys (NYSE:ENS) has a dividend yield of 1.09% with a 14.74% payout ratio. The latest quarterly dividend of $0.175 was paid out on June 30 to the shareholders of record on June 16.

Here is what Harding Loevner had to say about EnerSys (NYSE:ENS) in its Q3 2021 investor letter:

“EnerSys, a leader in the global industrial battery and stored energy solutions market, was the largest detractor in Industrials as increased investments in growth opportunities pressured its margins. One of its projects is a next-generation lithium battery that is compact and lightweight enough to be used as the backup power source for small-gauge cellular equipment, the kind that is vital to fifth-generation (5G) rollouts. Another project is an electric vehicle (EV) charging initiative, where the company is applying its industry-leading forklift charging technology to fast-charging infrastructure for commercial and residential buildings.”

6. Enovix Corporation (NASDAQ:ENVX)

Number of Hedge Fund Holders: 23

Enovix Corporation (NASDAQ:ENVX) develops lithium-ion batteries with its proprietary 3D cell architecture, which is considered the “next generation” technology in EV batteries. The company believes that its new tech can bring 24% to 133% higher energy density than the widely used battery technologies.

Enovix Corporation (NASDAQ:ENVX) started developing its unique battery technology in 2007. However, the company started its operations in 2Q22 and reported a $0.18 loss per share, outperforming the estimates by 1 cent. The revenue of $5.1 million beat the consensus by a huge margin of $4.78 million.

On August 24, Cowen analyst Gabe Daoud reaffirmed an Outperform rating on Enovix Corporation (NASDAQ:ENVX) shares and raised his price target to $36 from $19. The analyst believes that the shares are trading at a higher price after the company’s Q2 earnings report.

Enovix Corporation (NASDAQ:ENVX) is a major lithium and battery player, just like Tesla, Inc. (NASDAQ:TSLA), Albemarle Corporation (NYSE:ALB), and Johnson Controls International plc (NYSE:JCI).

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