We recently compiled a list of the 10 Best Battery Stocks To Buy Now According to Short Sellers. In this article, we are going to take a look at where Honeywell International Inc. (NASDAQ:HON) stands against the other battery stocks.
Electric vehicles are the latest trend in the automotive market which is revolutionizing the whole industry. According to Grand View Research, the global electric vehicle (EV) market was valued at $1.07 trillion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 33.6% from 2024 to 2030 and reach $8.85 trillion by the end of the forecast.
The growth is driven by government policies, incentives, and advancements in battery technology, which are making EVs more affordable and appealing. The transportation and logistics sectors are increasingly adopting EVs due to their lower emissions and operational costs, with companies like Amazon integrating electric trucks into their fleets.
Similarly, Grand View Research believes that the global EV battery market was valued at $44.69 billion in 2022 and is projected to grow at a CAGR of 21.1% from 2023 to 2030. Strategic collaborations among battery manufacturers, e-mobility providers, and energy suppliers are improving battery durability and lifespan, while the increasing production of EVs in countries like China, Germany, and Japan, along with government investments in EV charging infrastructure, is further accelerating the market. However, fluctuating raw material prices, such as lithium-ion, could impact production costs.
The Growing Importance of Critical Minerals in Energy Transition
According to BP’s Energy Outlook 2024, the transition to a low-carbon energy system will require a substantial increase in the use of critical minerals, such as copper, lithium, and nickel, essential for supporting the infrastructure and assets needed for this transition. According to the report, the rapid expansion of electric vehicles is projected to reach 1.2 billion (current trajectory) to 2.1 billion (goal to reach Net Zero) by 2050, which will significantly increase the demand for batteries and in turn, higher demand for minerals like lithium and nickel.
Copper demand is expected to rise by 75-100% by 2050, mostly due to its use in EVs and the extension of electricity networks. Lithium demand could grow 8 to 14 times by 2050, mainly driven by its use in EV batteries, which will account for about 80% of total lithium demand by 2050. Lastly, nickel demand is projected to increase two to three times by 2050, with most of this growth linked to lithium-ion batteries in EVs.
How Competitive Pricing and Leasing Are Shaping the EV Market
In an interview at CNBC Power Lunch, Erin Keating, Cox Automotives executive analyst, explored the factors shaping the EV market. She noted that Tesla and Chevy initially dominated EV sales, which is why a growing supply of used cars from the former is now available. These used EVs have become more affordable, partly due to tax credits of up to $4,000. This is helping to drive sales in the used EV market and making it a more attractive option for consumers.
However, the lease market is offering deals that compete with used EV prices. According to Keating, while this puts downward pressure on used EV prices, she emphasized the benefit of the situation and said that more leased vehicles today will enter the used market in a few years, which will ensure a steady supply of affordable used EVs in the future.
Keating also addressed the issue of buyer’s remorse, as some people are frustrated with the slower development of EV infrastructure and range anxiety. Despite this, she reassured consumers that the batteries in used EVs are holding up well with minimal degradation.
It means consumers can trust the longevity of these vehicles, and automakers are committed to supporting them. Although some challenges remain, she believes that as infrastructure improves, consumer confidence and adoption of EVs will continue to grow.
Our Methodology
For this article, we used stock screeners and ETFs including Amplify Lithium & Battery Technology ETF and Lithium & Battery Tech ETF to identify companies involved in the EV battery market. We then selected 10 stocks with the smallest short interest and listed them in descending order of their short interest. We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
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).
A shot of a commercial plane with a blur of color in the background, representing the production of auxiliary power units in the Safety and Productivity Solutions segment.
Honeywell International Inc. (NASDAQ:HON)
Short Interest as % of Shares Outstanding: 0.89%
Number of Hedge Fund Holders: 50
Honeywell International Inc. (NASDAQ:HON) is a multinational conglomerate with a strong footing in the global market due to its broad and innovative portfolio spanning aerospace technologies, building automation, energy and sustainable solutions, and industrial automation. The company has been advancing battery technology, and its Honeywell Ionic battery energy storage system (BESS) is evidence of this focus. The system is designed to optimize energy costs while offering reliable backup power and reducing carbon emissions. Its flexibility is highlighted by its ability to support different battery chemistries and scale from around 700 kilowatt-hours (kWh) to 300 megawatt-hours (MWh).
In the EV sector, the company has made significant strides with its battery safety sensors. These sensors are essential for the early detection of thermal runaway, a critical safety feature for EVs and energy storage systems. The company’s current sensors, including the CSNV, CSHV, and CSSV series, provide accurate battery state measurements and adhere to international safety standards. Furthermore, the BAS Series and BPS Series offer advanced detection capabilities for thermal runaway and particulate matter within battery packs, which improves overall safety and dependability.
Its investment in the battery technology sector is also significant. The company’s $27.5 million investment in ESS Tech signals its dedication to advancing long-duration battery storage solutions. This investment aligns with the company’s broader goal of supporting sustainable energy technologies and expanding its footprint in the battery market. It tops our list of the best battery stocks to buy now.
In the second quarter, 50 hedge funds had stakes in Honeywell International (NASDAQ:HON), with total positions worth $1.08 billion. Millennium Management has increased its stake in the company by 179% to 1.6 million shares worth $351.117 million and is the most significant shareholder, as of the second quarter.
Honeywell International’s (NASDAQ:HON) diverse business segments contribute to its steady growth, regardless of market fluctuations. In the second quarter, it reported a 5% increase in sales, reaching $9.6 billion. Its non-GAAP adjusted EPS was $2.49. The Aerospace Technologies segment saw a 16% rise in revenue compared to the previous year, driven by increased flight hours, higher chipset deliveries, and improved supply chain conditions.
Similarly, the Building Automation segment’s revenue grew by 4% year-over-year, due to strong performance in data centers, healthcare, and energy services. The Energy and Sustainability Solutions segment also saw a 2% revenue increase, supported by strong demand for fluorine products in Advanced Materials.
Additionally, the company’s growth trajectory is supported by its strategic acquisitions, such as CAES Systems and Air Products’ liquefied natural gas process technology and equipment business, which were announced in June and July, respectively. These acquisitions are expected to strengthen the company’s capabilities and market position further.
Overall HON ranks 1st on our list of the best battery stocks to buy. While we acknowledge the potential of HON as an investment, our conviction lies in the belief that 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 HON but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
