We recently compiled a list of the 12 Biggest Lithium Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where FREYR Battery, Inc. (NYSE:FREY) stands against the other lithium stocks.
Lithium is a soft, silver-white alkali metal that has become a cornerstone of the clean revolution. Its commonly used form, lithium carbonate, is required for the production of lithium-ion batteries. These power a variety of technologies, including vast renewable energy storage systems and electric vehicles (EV), making them nearly indispensable in the development of sustainable energy solutions. Although EVs have been available for a while, it wasn’t until recent technology breakthroughs and cost reductions that they became a more reliable option for consumers, resulting in an increase in lithium demand. The International Energy Agency states that the demand for lithium will climb by over 40 times between 2020 and 2040, particularly for use in battery storage and electric cars. As per Fortune Business Insights, the global lithium market achieved a valuation of $22.19 billion in 2023 and is expected to reach $134.02 billion by 2032, reflecting a CAGR of 22.1%.
According to a McKinsey report, the global drive to net-zero will depend on guaranteeing a consistent supply of essential battery raw materials, especially as demand for EVs climbs toward the latter of this decade. Based on the report, the global market for BEV passenger cars is expected to increase sixfold between 2021 and 2030, with yearly sales rising from 4.5 million to almost 28 million units during that time. In addition, such a forecast indicates that the sector is “likely to confront persistent long-term challenges” in line with demand. McKinsey also states that 80% of all lithium mined now is used by battery manufacturers, and by 2030, that number may rise to 95%.
On the other hand, analysts predict increased volatility in lithium carbonate in 2024, following a challenging year in which the metal’s price plunged 22% due to a global supply glut. However, some balance is expected to recover. S&P Global predicts that as production cuts begin to reduce excess supply, lithium surplus would fall to 33,000 metric tons in 2025 from 84,000 metric tons in 2024. According to Chris Berry, president of House Mountain Partners, however, the behavior of the lithium price over the next year may be unpredictable. He said the following:
“Lithium price volatility is a feature of the energy transition and not a bug. You have a small but fast-growing market, opaque pricing, legislation designed to rapidly build critical infrastructure underpinned by lithium and other metals, and this is a recipe for boom-and-bust cycles demonstrated by extremely high and extremely low pricing.”
Our Methodology
For our list of the 12 biggest lithium stocks to buy, we narrowed down companies involved in lithium mining and supply, lithium-ion battery sales, or technologies related to battery operations. The names on this list are ranked in ascending order according to the hedge fund sentiments surrounding them, using data from Insider Monkey’s Q3 2024 database.
Why do we care about what hedge funds do? 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 technician in a laboratory setting testing an advanced lithium-ion battery cell.
FREYR Battery, Inc. (NYSE:FREY)
Number of Hedge Fund Holders: 14
FREYR Battery (NYSE:FREY) is actively developing and manufacturing battery cells for use in electric mobility, stationary energy storage, and marine applications across Europe and around the world. The company’s primary goal is to provide environmentally friendly, large-scale battery solutions that aid international efforts to reduce emissions.
BTIG raised its price target for FREYR Battery (NYSE:FREY) from Neutral to Buy in December, with a revised price of $4. Prior to this upgrade, FREYR announced the purchase of a 5GW solar module facility in Texas from Trina Solar. The BTIG analyst believes that once the transaction is completed, FREYR will be able to begin generating earnings before interest, taxes, depreciation, and amortization.
FREYR Battery (NYSE:FREY) reported a $27 million loss in the second quarter of 2024, which exceeded analysts’ expectations. Despite these losses, the company still had $253 million in cash and no outstanding debt. As part of a strategic shift, FREYR Battery relinquished all rights to approximately 6.98 million shares of 24M Technologies’ Series G preferred stock and ended its licensing agreements with the company. Moreover, the European Union Innovation Fund awarded the company a €122 million grant to fund a joint venture Cathode Active Material manufacturing project in Finland.
Overall FREY ranks 10th on our list of the biggest lithium stocks to buy according to hedge funds. While we acknowledge the potential of FREY as an investment, our conviction lies in the belief that certain 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 FREY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
