We recently published a list of 13 Most Promising EV Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where EnerSys (NYSE:ENS) stands against the other most promising EV stocks to buy according to hedge funds along with the industry outlook.
According to a September 13 report by S&P Global, the auto industry’s shift to electric vehicles (EVs) is accelerating, with 2026 seen as a pivotal year for adoption. By 2030, over 25% of new passenger cars sold are expected to be electric, as the transition away from internal combustion engines (ICE) gains momentum.
Major automakers are projected to produce over 70% of global EVs by 2030, up from just 10% in 2022. However, a few challenges remain, like range anxiety, especially for those without convenient charging options. Addressing these issues will require collaboration among automotive, utilities, government, and property owners, which could create a way for significant growth in vehicle electrification and potentially end the ICE era.
We discussed the market dynamics of the EV industry in our article, 11 Small Cap EV Stocks to Invest In. Here is an excerpt from the article:
“While the growth in the US and Europe is slowing down, China is picking up a significant pace and dominating the EV landscape. According to a World Economic Forum report, Chinese EVs are much cheaper than their Western counterparts, with an average price of $34,400, compared to $55,242 in the U.S. The price gap is driven by lower labor costs, favorable government subsidies, and more affordable battery sourcing.
Chinese automakers now produce more than half of the world’s EVs and are using their cost advantages to potentially dominate the global market. As Chinese brands gain scale and expertise, their competitive pricing could allow them to challenge Western automakers.”
The Electric Vehicle Shift and Its Economic Impact on Europe
While Europe saw significant adoption of EVs in the earlier years, it has seen a slowdown. According to an October 3 report by McKinsey, the growth of EVs in Europe poses both opportunities and challenges for the automotive industry, which currently contributes $1.9 trillion to the economy.
While electric mobility could add up to $300 billion in gross value added (GVA) by 2035, the industry could risk losing $400 billion if European OEMs’ global market share declines from 60% to 45%.
Key strategies for success include expanding the domestic battery supply chain, improving manufacturing capabilities, streamlining regulations, and investing in R&D and talent development. By proactively addressing these challenges, European OEMs can capitalize on the EV shift, generate new value, and secure the region’s economic future in the automotive sector.
Shifting Gears to the Inevitable Future of Electric Vehicles
In a CNBC interview, Young Liu, Chairman of Hon Hai Technology Group said that the future of the automotive industry will be dominated by electric vehicles, with hybrids playing a limited role due to advancements in battery technology. He made a note of current challenges such as charging times and range anxiety, but expects improvements in battery systems will eliminate the need for hybrids.
Liu outlined a path to profitability for EV companies based on three key strategies: “platformization, modularization, and standardization”. He believes these will help streamline operations and reduce the need for individual investments in proprietary platforms, which is a challenge for traditional manufacturers due to their existing structures.
Our Methodology
For this article, we used stock screeners and ETFs to identify over 40 companies with significant operations related to the EV industry. Next, we narrowed our list to 13 stocks most widely held by institutional investors. The most promising EV stocks are listed in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s Q2 database of 912 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 close up view of an energy efficient system housed in a specialized cabinet.
EnerSys (NYSE:ENS)
Number of Hedge Fund Holders: 30
EnerSys (NYSE:ENS) provides energy storage solutions for industrial applications. The company designs, manufactures and distributes energy systems, motive power batteries, specialty batteries, chargers, power equipment, and outdoor enclosures. It operates in over 100 countries.
Its operations are divided into four segments, Energy Systems, Motive Power, Specialty, and New Ventures. Energy Systems serve industries like telecommunications, broadband, and utilities, providing power conversion and storage solutions.
Motive Power products support electric forklifts and industrial vehicles, while Specialty batteries cater to aerospace, defense, medical, and automotive sectors. New Ventures focuses on energy management for applications such as utility backup and electric vehicle charging.
On September 20, EnerSys (NYSE:ENS) announced its selection for $199 million in negotiations from the U.S. Department of Energy (DOE) to support the development of a lithium-ion cell production facility in Greenville, South Carolina. The funding comes from the Bipartisan Infrastructure Law aimed at expanding U.S. battery manufacturing capabilities.
It plans to invest $615 million over four years to build the 500,000-square-foot plant, which will create up to 500 jobs and produce five gigawatt hours (GWh) of lithium-ion cells annually for commercial, industrial, and defense use. The company is also investing $50 million to build a specialized production line for the U.S. Department of Defense.
EnerSys (NYSE:ENS) will use state, federal, and tax incentives to fund the gigafactory, with production expected to start in 2028. It is collaborating with European battery firm, Verkor SAS for manufacturing expertise and aims to strengthen its domestic supply chain.
As reported by The Fly on September 23, Roth MKM analyst Chip Moore maintained a Buy rating on the company with a $120 price target. The optimism is based on the above-discussed $199 million award negotiation with the DOE.
The analyst noted that EnerSys (NYSE:ENS) is well-positioned to support the energy transition and address complex power challenges for its customers. He also expects that trends like electrification, automation, and digitization will drive future growth, which align with the company’s 8%-10% growth target. The company ranks at 10 on our list of most promising EV stocks.
Overall ENS ranks 10th on our list of most promising EV stocks to buy according to hedge funds. While we acknowledge the potential of ENS 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 ENS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.