8 Best EV Battery Stocks To Buy in Late 2024

4. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Holders: 29

Rio Tinto Group (NYSE:RIO) is a multinational mining and metals company. It is involved in multiple sectors, including copper, aluminum, diamonds, and lithium, making it one of the best EV battery stocks.

While the company already has significant lithium assets, it has planned to further expand its operations in the industry with the acquisition of Arcadium Lithium plc. On October 9, the company announced its plans to acquire Arcadium in an all-cash deal valued at $5.85 per share at approximately $6.7 billion.

Arcadium Lithium is recognized as a rapidly growing, vertically integrated producer of lithium chemicals, with an annual production capacity of 75,000 tonnes of lithium carbonate equivalent, and plans to more than double this by 2028. It is one of the major lithium suppliers of Tesla.

Rio Tinto’s (NYSE:RIO) CEO Jakob Stausholm emphasized that this acquisition aligns with the company’s long-term strategy to establish a strong lithium business alongside its existing aluminum and copper operations. Arcadium’s assets are expected to support significant growth in lithium production, contributing to a projected 130% capacity increase by 2028. The transaction is expected to close in mid-2025.

Bank of America Securities analyst Jason Fairclough sees significant potential for the company in light of this deal. On October 11, TipRanks reported that the analyst reaffirmed a Buy rating for Rio Tinto (NYSE:RIO) with a price target of 7,300.00 GBp. Fairclough views this deal as a strategic move to improve the company’s growth in the lithium sector.

He considers the deal’s valuation reasonable and noted the implied 6x EBITDA multiple for 2028 is consistent with Rio’s (NYSE:RIO) existing metrics. He pointed out that the stock is currently trading at about 0.7x net present value (NPV), which presents a compelling entry point for investors. The analyst believes the timing of the lithium acquisition is advantageous, especially as high-cost producers in China are cutting back on production, which may indicate a market stabilization.