7 Best Battery Stocks to Buy According to Analysts

3. Sigma Lithium Corporation (NASDAQ:SGML)

Upside Potential: 128.12%

Sigma Lithium Corporation (NASDAQ:SGML) explores lithium deposits in Brazil. It holds a 100% interest in key properties across 185 kilometers in Minas Gerais. It supplies directly to the global lithium-ion battery market, crucial for electric vehicles.

The company showed strong financial performance during the second quarter of 2024, with revenue of $45.9 million. This was driven by sales of nearly 53,000 tons of lithium concentrate at a price of approximately $894 per ton. This reflected Sigma’s effective cost management and operational excellence.

Moreover, the operating cash margin reached 54% and adjusted EBITDA margins were recorded at 30%. Sigma Lithium Corporation (NASDAQ:SGML) reported cash operating costs of $420 per ton, reflecting a decline of 22-24% from previous levels. As a result, it ended the quarter with a cash balance of $108 million, driven by $46 million in net revenue.

Capital expenditure during the quarter was $9 million, primarily driven by Phase 2 expansion and brownfield investments. Moreover, Sigma Lithium Corporation (NASDAQ:SGML) also achieved operational reliability with consistent delivery of 22,000 tons of lithium concentrate every 30-35 days. This has allowed SGML to improve credit terms and charge a price premium over its competitors.

The company is focused on incorporating sustainability into its operations through its Greentech plant. The plant’s dry stacking process reduces tailings and water usage, contributing to the company’s confidence in reaching 60,000 tons of sales in Q3 2024.

However, it has faced operational challenges due to the consistent decline in lithium prices over the past year. As a result, the share price has fallen by more than 70% on a YTD basis. Although Sigma Lithium Corporation (NASDAQ:SGML) has faced profitability challenges in the past, it became profitable last year, indicating its commitment to growth.

Nevertheless, the situation has improved with the reduction in lithium supply, which further increases growth prospects. As a result, SGML’s share price has increased by 15% in the past month. Moreover, 20 hedge funds have collectively invested $8.9 million in the company (as of Q2 2024) as per Insider Monkey’s database. Therefore, analysts have predicted an upside potential of 128.12% in the share price.