In this article, we will discuss the 7 Best Battery Stocks to Buy According to Analysts.
Electric Mobility: A Key Driver of the Battery Industry
The move to electric mobility is a major driver of the battery market globally. Rising gasoline costs and environmental concerns are driving a shift toward electric vehicles. A survey by Carwow found that 44% of drivers changed their driving preferences owing to rising fuel costs. As such, about 14 million new electric automobiles were registered in 2023, showcasing increased demand for EVs, as reported by the International Energy Agency. In the same year, annual electric car sales increased by 3.5 million, representing a 35% uptick year-over-year (YoY). The report also noted that battery electric cars made up 70% of the total electric car inventory in 2023.
Apart from consumer demand, the governments are supporting initiatives to drive growth in electric vehicles and battery markets. In April 2024, British International Investment (BII), the UK’s development finance institution (DFI) agreed to an investment of $19 million in “CHARGE ZONE” of India, which is a rapidly growing EV charging network. As reported in our previous article on the most promising EV stocks to buy, the U.S. Department of Energy announced $1.7 billion in funding to transform 11 struggling auto manufacturing plants into EV production hubs and related products. Thus, governments are clearly striving for a rapid EV transition.
Sector Performance
Despite a promising future, the battery market, especially lithium, is undergoing a tough patch. The oversupply of critical materials including lithium, nickel, and cobalt has shrunk their prices, posing additional challenges for mining and battery companies. As China dominates global production with more integrated production, its utilization of only 40% of its maximum cell output in 2023 resulted in massive over-supply. Therefore, this posed problems for the United States and European countries which strived to localize their supply chains through partnerships.
Therefore, the broader battery market has had a relatively weak performance in 2024, largely driven by A decline in the lithium stocks. Lithium prices saw a downtick of over 80% in 2023, and they reached $12,900 per ton in June 2024 – the lowest in a 35-month period. This is attributed to the oversupply of lithium and the resulting decline in its demand. Furthermore, this is due to a revision in the EV sales growth forecast, particularly as the Chinese market matures and Western demand takes a downward turn. As a result, share prices have also seen a significant decline.
However, the EV revolution continues as BNP Paribas eyes a 23% global sales growth in 2024. Although pure battery EVs’ demand is stagnating, plug-in hybrid EVs are experiencing substantial growth, particularly in China, where hybrid sales grew 90% YoY in April and May 2024, compared to only 10% for battery EVs, according to BNP.
Global Battery Market
While the short-term outlook of the battery market is somewhat uncertain, the long-term outlook is much more promising. The global demand for lithium-ion batteries is expected to surge, driven by electrification and clean energy. The battery demand is projected to grow from 700 GWh in 2022 to 4.7 TWh by 2030.
With the market standing at over $100 billion mark in 2022, it is set to grow at a CAGR of 15.8% by 2030, as reported by Forbes. Apart from consumer demand, regulations like the EU’s internal combustion ban and the U.S. Inflation Reduction Act will also contribute to this growth. Additionally, the emergence of new technologies in the automotive, space, and telecommunication industries that are reliant on solid-state batteries further fuels the growth of batteries.
United States Battery Market
Driven by increased EV sales, the U.S. battery market was valued at $29.44 billion in 2022 and is projected to reach $85.7 billion by 2030. The market is expected to rise at a CAGR of 14.23% during the projected period. This expansion is being spurred by government initiatives that promote renewable energy and innovation. In June 2021, the US announced $200 million in funding for electric vehicles and batteries. Furthermore, Lyten raised $200 million in equity funding to manufacture lightweight batteries and create a manufacturing facility in California, thereby increasing the country’s battery production capacity.
Thus, there’s certainly a promising future for the battery market, and that’s why it is essential we shed light on the Best Battery Stocks to capitalize on its future potential.
A row of electric vehicles all powered by the company’s advanced battery systems.
Methodology
To curate the list of the 7 Best Battery Stocks to Buy According to Analysts, we screened for companies involved in the battery industry, focusing on areas relevant to battery production and their applications. From that group, we picked stocks with a projected upside potential of over 15% based on analyst price targets. The stocks are ranked according to their upside potential, as of September 22.
We also measured hedge fund sentiment around each stock according to Insider Monkey’s database of 920 funds as of Q2 2024. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7. Enphase Energy, Inc. (NASDAQ:ENPH)
Upside Potential: 15.28%
Enphase Energy, Inc. (NASDAQ:ENPH) manufactures and designs home energy solutions. They specialize in microinverter technology that deals with the optimization of solar energy at the modular level. Along with that, it also offers energy storage systems, cloud-based monitoring, and electric vehicle charging. The products are sold to various solar distributors as well as homeowners in both domestic and international markets.
Enphase Energy, Inc. (NASDAQ:ENPH) delivered strong results in Q2 2024, reporting revenue of $303.5 million. This was mainly driven by the shipment of 120 megawatt-hours of IQ batteries. Despite the broader issue of lithium oversupply, the company’s battery segment has become a growth driver with the rising demand for lithium-based storage solutions.
An important factor in the company’s performance was the impact of the California NEM 3.0 policy. This policy resulted in significantly lower compensation for the consumers who didn’t install battery storage along with their solar. Thus, battery attachment rates jumped from 15% under NEM 2.0 to over 90%. This reflected a sharp increase in demand for energy storage systems, giving Enphase a market advantage. Therefore, the share price has also shown a positive movement of over 18% in the past six months. Moreover, the reduction in channel inventory by $92 million signals smoother operations in the upcoming quarters.
Enphase Energy, Inc. (NASDAQ:ENPH) is further strengthening its product portfolio with the third-generation IQ battery with a 15-year warranty. It has already gained a response from Europe and North America, signaling the growing international presence of the company. Moreover, Enphase has already planned for a fourth-generation battery. It integrates advanced power conversion and battery management systems, which enhance both cost structure and efficiency. In addition to product advancement, the company is scaling up its U.S.-based production to meet domestic requirements.
However, Enphase Energy, Inc. (NASDAQ:ENPH) was sued for securities law violations with claims of material misrepresentations and delaying delivery of batteries. This highlighted weaknesses in the company’s regulatory compliance, which was an additional hassle amidst the broader challenges of the battery market. Despite that, the company has announced the shipment of its IQ battery 5P to Belgium recently.
Nevertheless, as of Q2 2024, 42 hedge funds have collectively invested $505 million in the company, according to Insider Monkey’s database. Furthermore, analysts have forecasted an upside of 15.28% in the share price, earning ENPH a place on our list of the best battery stocks to buy now.
6. EnerSys (NYSE:ENS)
Upside Potential: 18.62%
EnerSys (NYSE:ENS) provides energy solutions across multiple segments, including Energy Systems, Motive Power, Specialty, and New Ventures. The company’s product portfolio ranges from UPS systems for data centers to batteries for industrial and military applications. The company also supplies energy storage systems for electric vehicles.
EnerSys (NYSE:ENS) reported net sales of $853 million during the first quarter of fiscal year 2025. This was down by 6% from the prior year, driven by a 3% decline in volume and 2% pressure from price mix. Moreover, a 1% foreign exchange impediment further contributed to the revenue decline.
Despite this, the company maintained a solid gross margin of 28%. It was up by 120 basis points year-over-year and was supported by $30 million in benefits from the Inflation Reduction Act (IRA). The adjusted earnings per share (EPS) rose by 5% year-over-year to $1.98. Furthermore, the adjusted EBITDA was reported at $121 million, reflecting a decline of $1 million from last year.
The Energy Systems segment saw a 15% decline in revenue due to weaker volumes and foreign exchange pressures. However, the company anticipates the recovery of the segment in the upcoming quarter due to addressing inventory surpluses. On the other hand, the Motive Power segment delivered a 4% increase in revenue on account of a 6% increase in volumes.
Despite the strong financial performance, EnerSys (NYSE:ENS)’s President sold shares of ENS on August 29. This raised concerns about insider sentiment; therefore, investors should closely monitor the company’s upcoming share price movements.
Regardless, EnerSys (NYSE:ENS) completed the acquisition of Bren-Tronics which is expected to contribute $100 million in sales with 25% EBITDA margins. Moreover, the company also secured its first order for a 48-volt heavy-duty lithium battery with anticipation of further growth in the electric vehicles segment.
EnerSys (NYSE:ENS) has also raised its revenue guidance to $3.73 billion. The company’s share price has also surged by 6% in the last month. Also, 30 hedge funds have invested $430 million in the company as of Q2 2024, as per Insider Monkey’s database. Analysts have predicted an upside of 18.62% in the share price, reflecting strong market confidence and bullish sentiment.
5. Sunrun Inc. (NASDAQ:RUN)
Upside Potential: 19.34%
Sunrun Inc. (NASDAQ:RUN) designs, installs, and maintains residential solar energy systems across the United States. The company offers solar panels, battery storage, and related products. It also provides energy solutions for new homes.
Sunrun Inc. (NASDAQ:RUN) demonstrated robust financial performance in Q2 2024. This was primarily driven by the company’s continuous focus on cash generation and its strategic expansion into clean energy solutions. As such, in the quarter, the company reported $217 million in cash, making a significant improvement from the prior quarter. Following this growth and confidence in its operational efficiencies, Sunrun raised cash generation guidance to between $350 million and $600 million for 2025.
The company’s total installed energy capacity reached 192 megawatts during the second quarter. This was mainly attributable to a more selective approach, with a greater focus on high-margin customers amid rising consumer demand. Moreover, it installed 265 megawatts of storage in the second quarter, the highest in the company’s history. Therefore, the battery storage segment of Sunrun Inc. (NASDAQ:RUN) performed exceptionally well during the quarter. Storage attachment rates reached 54% in the quarter, up from 18% in the same period last year. This rapid growth is boosted by the company’s “storage-first” model, with the aim of enhancing customer value and improving margins.
Sunrun now operates 116,000 storage systems in the United States, with a total network capacity of 1.8 gigawatt-hours. This is also the backbone of the company’s virtual power plant (VPP) initiatives. An example of such success is the partnership with Tesla in Texas where customers are compensated for dispatching solar power from their homes.
However, the company anticipates that solar installation volumes will fall to the lower end of its guidance for 2024. Installations are projected to grow by 4%, with a 2% drop in the utility-scale segment and a 19% decline in the residential sector.
Despite the challenges, Sunrun Inc. (NASDAQ:RUN) recently became the first company to register 1 million residential solar customers. The stock has surged 100% in the last 6 months, driven by continued success and growth.
As such, 35 hedge funds have collectively invested $694 million in the company (as of Q2 2024) as per Insider Monkey’s database. Therefore, analysts predict an upside of 19.34% in the share price.
4. Albemarle Corporation (NYSE:ALB)
Upside Potential: 31.15%
Albemarle Corporation (NYSE:ALB) is involved in the development and manufacturing of specialty chemicals, with a strong focus on battery technology through its energy storage segment. The company provides lithium compounds, such as lithium carbonate and lithium hydroxide. These compounds are essential for energy storage solutions and electric vehicle (EV) batteries. It serves the consumer electronics and automotive industries through its diversified product portfolio.
Albemarle Corporation (NYSE:ALB) reported a strong performance in Q2 2024 despite a challenging lithium market. The energy storage segment reported a volumetric increase of 37% year-over-year. Early-stage commercial sales from the Meishan project boosted the segment’s performance.
Moreover, adjusted EBITDA for the quarter reached $386 million. This was mainly supported by increased volume in lithium sales, primarily driven by Talison JV. Albemarle Corporation (NYSE:ALB) maintained an optimistic outlook on the lithium market, with the price forecast set at $15 per kilogram for the rest of the year. The company attributes this to enterprise-wide cost improvements and strong contract performance in the energy storage department.
Albemarle Corporation (NYSE:ALB)’s cost-saving strategy is also worth mentioning. It is streamlining operations at its Kemerton site in Australia, with the aim of saving $200-300 million in capital spending. Furthermore, the company ended the quarter with $3.5 billion in liquidity, reflecting a strong financial position.
Nevertheless, it has faced significant lithium pricing pressures due to an oversupply from China and a softened EV market. As a result, its stock has fallen by more than 45% on a YTD (year-to-date) basis. Thus, the decline in lithium prices is raising concerns about the company’s future profitability.
As of Q2 2024, 32 hedge funds have invested $484 million collectively in the company as per Insider Monkey’s database. Additionally, analysts predict an upside potential of 31.15% in the share price, placing it on the list of the best battery stocks to buy.
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.
2. Plug Power Inc. (NASDAQ:PLUG)
Upside Potential: 174%
Plug Power Inc. (NASDAQ:PLUG) deals in hydrogen and fuel cell solutions across global markets through products like GenDrive for electric vehicles and ProGen for delivery vans. The product portfolio includes hydrogen production systems and liquid hydrogen as clean energy alternatives. Plug Power caters to industries including transportation and communication through direct channels and partnerships.
Despite significant efforts in scaling up its hydrogen production capabilities, the company struggled in revenue generation and cost management. Plug Power Inc. (NASDAQ:PLUG) reported $143.4 million in revenue during Q2 2024, recording a 45% decline from the same quarter last year. This revenue instability is due to PLUG’s growth stage, which is causing it to face pricing challenges. This decline contributed to a more than 10% drop in PLUG’s share price in the last month.
However, the $70 million expected from the 55-megawatt electrolyzer has not yet been recognized. The company has received cash for a large portion of this future revenue. Moreover, it anticipates revenue growth through the deployment of an additional 100 megawatts of electrolyzers by the end of the year.
On the brighter side, the quarter also saw a significant improvement in PLUG’s hydrogen-powered storage solutions. The segment’s margin improved during the quarter, thanks to increased production capacity at Georgia’s plant and strategic price increases across the hydrogen product portfolio. This demonstrates an improved outlook for the company.
Furthermore, in September 2024, Plug Power Inc. (NASDAQ:PLUG) announced the signing of a technical evaluation phase contract for 25 megawatts of electrolyzers for a green methanol project in Portugal. This project is expected to generate 80,000 tons of green methanol annually, which will be utilized in heavy industry and mobility applications.
As of Q2 2024, 15 hedge funds have collectively invested $10.7 million in the company according to Insider Monkey’s database. Along with that, analysts have predicted an increase of 174% in the share price, earning it a spot on our list of best battery stocks to buy.
1. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Upside Potential: 176%
SolarEdge Technologies, Inc. (NASDAQ:SEDG) manufactures advanced energy solutions systems. The portfolio includes power optimizers, inverters, EV chargers, and cloud-based monitoring tools. It offers lithium-ion cells and containerized battery systems in its energy storage segment.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) recorded $265 million in revenue during Q2 2024. The solar business contributed $241 million, while the non-solar business generated $24 million. The company delivered 2 million power optimizers, 66,000 inverters, and 128 megawatt-hours of batteries during the quarter, exhibiting consistent demand for its products despite challenging market conditions. It outperformed its shipment capacity by reporting $520 million in product sales, which was an increase of 18% compared to the previous quarter. Despite the record shipments, it undersupplied the market by $275 million due to its inventory clearance initiatives.
The U.S. residential market delivered a strong performance, with inverters and optimizers registering sales growth of 32% on a quarter-over-quarter basis. Moreover, battery sales also surged by 55%. This increase was mainly driven by the shift towards third-party ownership models and demand for DC-coupled backup storage systems. This demand was particularly visible in California and Puerto Rico regions, where power outages have driven people towards energy storage solutions. The U.S. commercial sales also increased by 18% due to the company’s advanced energy management systems.
However, SEDG plummeted by more than 80% in the last year due to declining demand and falling revenue growth. Despite this, the company is still focused on new product development. As part of its innovation strategy, it unveiled a solar platform for optimizing energy management. Furthermore, the DC-coupled modular system is expected to improve the company’s cost structure. It is designed to scale from 4.4 to 44 kilowatt-hours.
Given the initiatives, SEDG expects to turn cash flows positive by the first half of 2025. In anticipation of this growth, 24 hedge funds have collectively invested $182.1 million in the company as per Insider Monkey’s database (as of Q2 2024). Additionally, analysts have predicted an upside of 176% in the share price.
SEDG is the best battery stock to buy according to analysts. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SEDG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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