In this article, we discuss the 5 best lithium and battery stocks to buy. If you want to read a detailed analysis of the lithium and battery market, go to 12 Best Lithium and Battery Stocks To Buy.
5. Livent Corporation (NYSE:LTHM)
Number of Hedge Fund Holders: 30
Livent Corporation (NYSE:LTHM) is a performance lithium compounds manufacturer. Its products are used in lithium-based batteries, specialty polymers, and chemical synthesis applications. On August 8, CICC initiated Livent Corporation (NYSE:LTHM)’s coverage with an Outperform rating and a $27.30 price target.
On August 2, Livent Corporation (NYSE:LTHM) reported Q2 GAAP EPS of $0.31, in line with market expectations. The revenue soared by 114.0% on a YoY basis to $218.7 million, beating the analyst estimates by $9.31 million. The adjusted EBITDA surged by 78% over the quarter to $95 million. Moreover, Livent Corporation (NYSE:LTHM) raised its revenue and EBITDA guidance for FY 2022. The company expects to generate revenues of $800-$860 million, compared to the previous outlook of $755-$835 million. The EBITDA outlook was raised to $325 million-$375 million from the prior forecast of $290-$350 million.
Out of the 895 hedge funds tracked by Insider Monkey, 30 had a stake in Livent Corporation (NYSE:LTHM) at the end of the June quarter, compared to 25 funds in Q1 2022. In Q2, Joho Capital held the most prominent position with 3.94 million shares valued at $89.4 million.
4. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Number of Hedge Fund Holders: 29
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is a Chilean company that supplies plant nutrients. It is also one of the largest lithium producers in the world.
Sociedad Química y Minera de Chile S.A. (NYSE:SQM)’s net earnings for Q2 2022 surged by 10x on a YoY basis. The company reported a net profit of $859.3 million, compared to $89.8 million in the previous year. However, the company missed the analyst estimates of $876.4 million. In Q2 2021, the firm made total lithium sales of $163 million, which jumped to $1.85 billion in the recent June quarter. Sociedad Química y Minera de Chile S.A. (NYSE:SQM) recorded revenues of $2.6 billion, ahead of estimates by $260 million. In addition, the EBITDA was reported at $1.3 billion, up from $200 million in the prior year quarter.
On August 8, Deutsche Bank analyst Corinne Blanchard reiterated a Buy rating on Sociedad Química y Minera de Chile S.A. (NYSE:SQM). The analyst raised the price target on the firm to $115 from $105 and added that the company’s upside momentum continues and its analyst day “could unlock further growth strategy plans”.
3. Johnson Controls International plc (NYSE:JCI)
Number of Hedge Fund Holders: 33
Johnson Controls International plc (NYSE:JCI) is an Irish multinational, multi-industry company that produces fire and HVAC equipment for buildings. In 2021, the company introduced the Lithium-Ion Risk Prevention Solution for the Protection of Energy Storage Systems.
For the second quarter of 2022, Johnson Controls International plc (NYSE:JCI) reported an EPS of $0.63, compared to the estimates of $0.60 and generated a revenue of $6.1 billion, missing the consensus by $150 million.
As of August 29, Johnson Controls International plc (NYSE:JCI) has a dividend yield of 2.56% with an annualized dividend of $1.40. The latest quarterly dividend of $0.35 was paid out on July 15 to the shareholders of record on June 21.
Here is what Aristotle Capital Management had to say about Johnson Controls International plc (NYSE:JCI) in its Q1 2022 investor letter:
“As investors since the fourth quarter of 2017, we have enjoyed a front-row view of the large transformation that has taken place at Johnson Controls. Once a multi-industrial corporation, the company successfully turned itself into a pure-play buildings solutions and technology provider. Catalysts we previously identified for Johnson Controls included synergies following its merger with Tyco International, which provides fire safety and building security products, as well as benefits from its separation of non-building-focused businesses, such as automotive seating and batteries. With all catalysts in sight now nearing completion, and Johnson Controls now a better business for it – with higher recurring revenues and lower capital intensity – we decided to exit our investment to help fund the purchases of Xcel Energy and Atmos Energy.”
2. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 39
Albemarle Corporation (NYSE:ALB) is an American specialty chemicals company that generates most of its revenue from lithium manufacturing. According to the Insider Monkey database, 39 hedge funds had a stake in the company in Q2 2022. Marshall Wace LLP held the most prominent position in the quarter ending June 30, with shares worth $154.5 million.
Albemarle Corporation (NYSE:ALB) management expects its lithium sales to jump from 110,000 tons in 2021 to 250,000 tons in 2026. The rise in sales will be owed to the completion of the La Negra brine in Chile and Kemerton II in Australia. Moreover, the acquisition of the Qinzhou plant in China is also expected to play a significant role as it has the capacity to produce 25,000 metric tons of LCE. The plant is capable of producing battery-grade lithium carbonate and lithium hydroxide. Additionally, Albemarle Corporation (NYSE:ALB) has plans to expand to Silver Peaks in Nevada.
In Q2 2022, Albemarle Corporation (NYSE:ALB) posted an EPS of $3.45, outperforming the estimates by 14% and representing an increase of 89% on a YoY basis. The revenue of $1.48 billion was slightly above consensus, showing a growth of 91.2% from Q2 2021. In light of the strong results, Albemarle Corporation (NYSE:ALB) raised its net-sales guidance for FY 2022 from $5.8 billion-$6.2 billion to $7.1 billion-$7.5 billion. On top of that, the management expects its 2022 adjusted diluted EPS to be $19.25-$22.25, compared to the prior outlook of $12.30-$15.00.
Here is what Carillon Tower Advisers had to say about Albemarle Corporation in its Q3 2021 investor letter:
“Albemarle is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The firm’s shares outperformed in the quarter, driven largely by the current robust demand environment for lithium used in the manufacturing of electric vehicle batteries. As the global push towards the reduction of carbon emissions continues to gain steam, Albemarle is well positioned to benefit from the accelerating adoption of electric vehicles.”
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 72
Tesla, Inc. (NASDAQ:TSLA) is one of the world’s largest suppliers of battery energy storage systems and the world’s largest EV automaker by market cap. According to our database, 72 hedge funds held long positions in the company, with ARK Investment Management holding the most significant stake in Q2. Cathie Wood’s firm owned 1.44 million of the company shares, valued at $1.09 billion.
For Q2 2022, Tesla, Inc. (NASDAQ:TSLA) reported an adjusted EPS of $2.27, compared to the expected $1.81 estimate. However, the company posted a miss on revenues after generating $16.93 billion, versus the $17.1 billion consensus.
On August 29, after Tesla, Inc. (NASDAQ:TSLA) announced its 3-1 stock split, Deutsche Bank analyst Emmanuel Rosner reiterated a Buy rating on the company shares and lowered the price target to $375 from $1,125. The analyst made a guided tour of the company’s new Giga factory and noted that it “could be a game-changer,” and can make Tesla, Inc. (NASDAQ:TSLA) an “even more formidable competitor in the region, while likely boosting the company’s gross margins.” Rosner sees 2023 as the pivotal year for the company and views the company as “one of the most attractive stories in the autos sector.”
Here is what GMO LLC had to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2022 investor letter:
“To put the demand growth for clean energy materials into perspective, let’s look at Tesla (NASDAQ:TSLA). At its Battery Day last year, Tesla projected three terawatt hours of lithium-ion battery capacity needed in 2030 for the EVs and storage they expect to produce. To reach this target, Tesla alone would gobble up approximately 75% of the world’s current nickel production and four times the world’s current lithium production. These numbers are astounding enough, but when one considers that EVs currently represent just 15% of global nickel demand and about 45% of lithium demand and that Tesla will likely be producing only a small proportion of the world’s EVs in 2030, the implications are staggering. Clean energy materials companies will make a lot more money in the decades to come than they ever have both because they will be selling a lot more metric tons of material and because there are certain to be shortages where supply can’t keep up with the rapidly growing demand.”
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