The demand for batteries has seen a significant surge in recent times, leading to a rise in the valuation of battery stocks. With governments worldwide implementing stricter emissions regulations and consumers increasingly choosing electric over traditional combustion engines, the future for EV battery stocks looks exceptionally bright.
The electric vehicle battery market is projected to grow significantly from 2024 to 2029. As per Mordor Intelligence, the market could reach $178 billion by 2029, growing at an impressive CAGR of 23.5%. The demand for batteries increased by 65% to 550 GWh in 2022, as per IEA. The rising sales of electric passenger cars, particularly in China and the United States, mainly drive that growth.
Amidst this backdrop, certain EV battery makers stand out for their innovative approaches, strategic partnerships and robust financial performance. These companies are strategically positioned to capitalize on the increasing demand from major automakers. Thus, here are three battery stocks well-positioned to provide solid returns to investors.
Enovix (ENVX)
With its innovative approach to lithium-ion batteries, Enovix (NASDAQ:ENVX) is at the forefront of the battery technology industry. The company employs a proprietary 3D silicon cell structure and silicon anodes in its batteries. This technological enhancement leads to a higher energy density and positions Enovix as a leading player in the industry.
The company reported strong growth in its revenues in Q4 2023, with sales of $7.4 million in the quarter, up from $1.1 million in Q4 2022. The company anticipates starting battery production at its Fab-2 facility in Malaysia in April 2024, indicating a swift move toward commercial-scale manufacturing.
Although the stock has not done well in 2024, Wall Street analysts are still bullish on the company and have an average price target of $29.73 on the stock. That translates into a massive 374% potential upside in the near term.
Albemarle (ALB)
Albemarle’s (NYSE:ALB) position as a low-cost lithium producer provides it with a competitive edge in the industry. That advantage is crucial in periods of low lithium prices, as it allows the company to sustain operations more effectively than higher-cost producers.
In 2023, Albemarle experienced a tumultuous period characterized by fluctuating lithium prices. The impact was notably reflected in its Q4 earnings, where revenue declined by 10% year-over-year (YoY), attributed to the stark decrease in lithium prices. In response to the challenging market environment, Albemarle has strategically adjusted its capital expenditure and operational strategies.
Albemarle’s management remains optimistic about the long-term demand for lithium, projecting significant growth driven by the global shift towards electric vehicles. The company anticipates a demand surge that could nearly triple by 2030, reinforcing the strategic importance of maintaining a strong position in the lithium market.
ALB’s stock is down 22% in 2024. However, Wall Street analysts remain bullish on the stock and have an average price target of $149.34 on the stock. That provides a near-term potential upside of 33%.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) stands out with its Thacker Pass project, poised to become a critical asset in the North American lithium market. The project has gained strategic importance due to its scale and location in the United States. The U.S. is keen on bolstering domestic supply chains for critical minerals.
Lithium Americas has demonstrated prudent financial management amidst challenging market conditions. The company has secured a conditional commitment from the U.S. Department of Energy for a loan of $2.26 billion. That underscores government support and confidence in the project’s viability and strategic relevance. That financing is pivotal in ensuring the project’s completion without financial strain on the company’s resources.
The strategic partnership with General Motors (NYSE:GM), which includes a commitment to purchase significant quantities of lithium, provides additional financial stability and revenue visibility.
Although LAC’s stock is down 26% in 2024, Wall Street analysts are currently bullish on the company, giving the stock an average price target of $10.21. That provides a potential upside of 116% in the near term.
On the date of publication, Mohammed Saqib did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
