Battery stocks have been battered over recent months.
Falling lithium prices due to oversupply, subdued demand in China and lackluster sales figures from the electric vehicle (EV) market have all contributed to the rare earth mineral’s plummeting price. According to Koyfin, the price of lithium carbonate has fallen 68.8% over the past 12 months. While there was somewhat of a recovery in Q1 of 2024, it appears prices are back in free fall.
Despite this big of macroeconomic news not being good for the overall battery market, the May consumer price index (CPI) report could turn out to have a silver lining. Not only did inflation cool more than most economists had expected, but costly items like new automotives as well as car insurance exhibited notable decreases in pricing pressure.
As inflation cools, interest rate cuts become more likely. This should make investors bullish not only on EVs but also on battery stocks. Let’s examine three battery stocks with robust fundamentals as well as strong buy ratings from Wall Street.
BYD (BYDDY)
If you have been following developments in the global EV market, it hard to not have heard of BYD (OTCMKTS:BYDDY). The Chinese EV maker has catapulted onto the global stage with a massive fleet of electric and hybrid vehicles that come with an amazing price tag. BYD surpassed EV pioneer Tesla (NASDAQ:TSLA) in both global production and sales in 2024. And throughout 2024, BYD continues to increase sales and deliveries while its American counterpart has noticeably struggled.
What most don’t know is BYD had its start as a lithium-ion battery producer for a range of consumer products way before it entered the EV space. BYD remains a key supplier in the lithium-ion battery market. The EV maker seems to be constantly trading places with LG Energy as either the second or third largest battery producer in terms of market share.
BYD has garnered 6 strong buy ratings from Wall Street institutions as well as 22 buy ratings from a host of other banks and brokers.
Sigma Lithium (LAC)
Another company crucial to the lithium battery supply chain is Sigma Lithium (NASDAQ:SGML). However, Sigma Lithium is not a tech company or a developer of batteries per se. Rather, the firm mines lithium carbonate from out of ground and serves as a supplier of the critical rare earth mineral to a number of battery makers and automotive companies.
Sigma Lithium owns the Grota do Cirilo lithium mine in Brazil. At the project’s inception, the mine was thought to have about 54.8 million tons of lithium in the form of hard rock spodumene. Recent updates from Sigma Lithium have revised that number upward to 77.0 million tons. With the increase in reserves, Sigma Lithium expects the mine to last for nearly 25 years. Moreover, once the mine is in its production phase, the miner plans for a 744 kilotons/year production target.
The lithium producer has two strong buy ratings from Wall Street and four buy ratings. Having fallen nearly 70% over the past twelve months, now may be the time to buy up shares.
Albemarle (ALB)
Founded in 1887, Albemarle (NYSE:ALB) is another influential chemicals company that plays a significant role in the battery space. The firm has a number of lithium brine and hard rock mining facilities across the globe, including Australia, Chile, China and the U.S.
In addition, Albemarle develops a variety of specialty chemicals for other sectors of the economy. Those companies are within petroleum refining, automotive and pharmaceuticals industries.
Unfortunately, the company’s outsized exposure to lithium has left its vulnerable to the lithium price. In Albemarle’s Q1 earnings report for fiscal year 2024, revenue came in line with expectations. However, it but represented 38% year-over-year (YOY) decrease from the same period in 2023. Also, net income was less impressing, coming in at $2.4 million.
Despite these short-term setbacks, Albemarle’s long-term fundamentals remain intact. Therefore, the company’s role in the battery supply chain should not go understated. ALB has garnered two strong buy ratings and 13 buy ratings from Wall Street firms.
On the date of publication, Tyrik Torres did not have (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.
