10 Best Battery Stocks To Buy Heading Into 2023

In this article, we discuss 10 best battery stocks to buy heading into 2023.

As the automobile sector transitions towards electric vehicles, battery demand is increasing. The battery industry will advance due to gigafactory construction, improving supply chains, and talent acquisition. Battery demand is forecasted to grow by nearly 30%, reaching 4,500 gigawatt-hours (GWh) per year worldwide by 2030. The battery value chain is anticipated to increase by ten times between 2020 and 2030 to reach annual revenues of as much as $410 billion.

In 2030, China is forecasted to be the largest market for lithium-ion batteries, with 40% of the global demand concentrated in the Asian country. About 90 percent of the total batteries will be demanded by mobility applications, primarily electric vehicles. Most OEMs and battery manufacturers have constructed or are aiming to initiate gigafactories for the production of lithium-ion batteries at scale, either independently or via joint ventures. 

The global lithium-ion market is expected to be worth $135.1 billion by 2031, indicating a compound annual growth rate of 13.1% during the forecast period of 2021 to 2031. Some of the best battery stocks to buy heading into 2023 include Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F). 

Our Methodology 

We selected the following battery stocks based on positive analyst coverage, strong business fundamentals, and market visibility. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. The list is arranged according to the number of hedge fund holders in each firm. 

Photo by Kumpan Electric on Unsplash

Best Battery Stocks To Buy Heading Into 2023

10. Microvast Holdings, Inc. (NASDAQ:MVST)

Number of Hedge Fund Holders: 11

Microvast Holdings, Inc. (NASDAQ:MVST) was incorporated in 2006 and is based in Stafford, Texas. The company designs, develops, and manufactures battery systems for electric vehicles and energy storage systems, offering a range of cell chemistries, such as lithium titanate oxide, lithium iron phosphate, and nickel manganese cobalt. Microvast Holdings, Inc. (NASDAQ:MVST) expects year-over-year revenue growth for the year ended December 31, 2022 to be in the range of 35% to 40%. 

On December 7, Microvast Holdings, Inc. (NASDAQ:MVST) announced that it had won a contract to provide a utility-scale battery energy storage system to a U.S. customer. Shipments are expected to arrive at the project site in 2023 and the commercial operation date is anticipated to be in 2024.

Oppenheimer analyst Colin Rusch on August 18 initiated coverage of Microvast Holdings, Inc. (NASDAQ:MVST) with an Outperform rating and an $8 price target. The analyst views Microvast Holdings, Inc. (NASDAQ:MVST) as a “pioneering battery material company, innovating around the molecular structure of critical battery composition to improve battery performance and reduce material use.” 

According to Insider Monkey’s data, 11 hedge funds were bullish on Microvast Holdings, Inc. (NASDAQ:MVST) at the end of Q3 2022, compared to 12 funds in the prior quarter. The collective stakes held by elite funds in the third quarter amounted to $24 million, compared to $28.4 million in the second quarter of 2022. 

Like Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F), Microvast Holdings, Inc. (NASDAQ:MVST) is one of the best battery stocks to consider for next year. 

9. Nikola Corporation (NASDAQ:NKLA)

Number of Hedge Fund Holders: 11

Nikola Corporation (NASDAQ:NKLA) is a technology company that works to develop energy and transportation solutions. It operates through two business units, Truck and Energy. The Truck segment manufactures and commercializes battery hydrogen-electric and battery-electric semi-trucks and the Energy segment constructs a network of hydrogen fueling stations, as well as offers BEV charging solutions. 

On December 15, Plug Power Inc. (NASDAQ:PLUG) and Nikola Corporation (NASDAQ:NKLA) announced that they have agreed to a strategic relationship focused on advancing the hydrogen economy. The green hydrogen supply agreement will begin on January 1, 2023. Plug Power will provide up to 125 tons per day of green hydrogen to Nikola Corporation (NASDAQ:NKLA) as its hydrogen production network continues to come online. The agreement forecasts 125 TPD volume by the conclusion of 2026, with 80% under a take-or-pay contract.

Cowen analyst Jeffrey Osborne on November 4 maintained an Outperform rating on Nikola Corporation (NASDAQ:NKLA) but lowered the firm’s price target on the shares to $10 from $12.50. 

According to Insider Monkey’s third quarter database, 11 hedge funds held stakes in Nikola Corporation (NASDAQ:NKLA), compared to 13 funds in the prior quarter. Philippe Laffont’s Coatue Management is a prominent position holder in the company, with 3 million shares worth $10.6 million.  

8. Lithium Americas Corp. (NYSE:LAC)

Number of Hedge Fund Holders: 14

Lithium Americas Corp. (NYSE:LAC) operates as a resource company in the United States and Argentina, primarily exploring for lithium deposits. The company was incorporated in 2007 and is headquartered in Vancouver, Canada. In the beginning of November, Lithium Americas Corp. (NYSE:LAC) announced plans to separate its North American and Argentine business units into two independent public companies. It is one of the best battery stocks to buy for next year. The lithium miner has several ongoing projects in the U.S. and Argentina while lithium faces potential supply shortages due to the huge EV demand, which will benefit the stock. 

On December 15, Piper Sandler analyst Charles Neivert reiterated an Overweight rating on Lithium Americas Corp. (NYSE:LAC) but trimmed the price target on the shares to $36 from $38. As a result of the high electric vehicle costs and a slight easing in the short-term lithium demand growth rate, the analyst modestly lowered earnings estimates for the company. However, the new target still factors in meaningful upside for the stock since lithium “will essentially be sold out for the foreseeable future,” the analyst wrote in a research note.

According to Insider Monkey’s Q3 data, 14 hedge funds were long Lithium Americas Corp. (NYSE:LAC), compared to 9 funds in the prior quarter. Jay Chen’s Himension Capital held the leading stake in the company, comprising 3.26 million shares worth $85.6 million. 

Here is what Massif Capital has to say about Lithium Americas Corp. (NYSE:LAC) in their Q1 2021 investor letter:

“Lithium Americas: The volatility noted above in LAC has resulted in solid returns via our options trades around our core equity position. At the current time, we are short calls on LAC, as we have done multiple times throughout the position’s life, expiring on May 21, 2021, at a $17.5 and $22.5 strike price. The volume of contracts sold at each strike corresponds to the size of the equity position we want should the calls expire in the money, and the underlying equity gets called away from us. The thought process behind this trade construction is that if we know the size of the position we want at a particular price point, there is no reason not to accumulate additional returns by pre-selling the stock we would have sold anyway.

High levels of volatility positively impact the price of options, increasing the premium we can earn from selling covered calls. To date, we have sold covered calls on LAC that have expired worthless four times, yielding a roughly 7% return on the equity position’s current value of 71 bps for the portfolio overall. The outstanding covered calls appear to be trending towards a similar worthless expiration. If they do, the covered call trades on LAC will result in us owning the shares with committed capital of -$0.28 per share.

Although we believe in the fullness of time LAC warrants a $30+ valuation, the prices achieved in early January of this year were not justified by the underlying fundamentals. Some will argue we should have sold down our position. We had already established our option positions and believe LAC is an emerging major in the lithium mining industry. Thus, we decided to maintain the position unchanged. Although still relatively high, the current $15 per share valuation is not crazy compared to where we think the firm should be trading based on fundamentals, so we are no longer overly concerned with the position as is.

LAC management also took advantage of the volatility issuing stock on January 22 for $22 a share. The ~$400 million in proceeds will be used to develop Thacker Pass, the US-based clay lithium deposit, which will likely be the largest producing Lithium mine in America when turned on. In our opinion, the stock issuance could not have come at a better time. LAC management has advanced the project through various development stages (de-risking), but with the share issuance, they have significantly reduced the need to bring in an outside partner to develop the asset as the first phase of the project is expected to cost roughly $581 million. After-tax and at an 8% discount rate, the Thacker Pass project’s present value is approximately $2.6 billion (the firm’s current market capitalization is $1.5 billion). Although the share issuance was dilutive, increasing the total shares by 17%, we believe it will, in the long run, prove a forward-looking, value-additive decision by management.

The lithium market remains an area of interest and focus for us. This reflects our belief that the most exciting investment opportunities to capture secular trends in EV’s and batteries are found upstream in the mining industry. It is also a reflection that there is a greater diversity of lithium investment opportunities relative to other battery metals.”

7. Solid Power, Inc. (NASDAQ:SLDP)

Number of Hedge Fund Holders: 15

Solid Power, Inc. (NASDAQ:SLDP) was founded in 2011 and is headquartered in Louisville, Colorado. The company is engaged in the development and commercialization of all-solid-state battery cells and solid electrolyte materials for the battery-powered electric vehicle market in the United States. It is one of the premier battery stocks to buy heading into 2023. Solid Power, Inc. (NASDAQ:SLDP)’s Q3 revenue of $2.81 million climbed 346% year-over-year, beating market estimates by $2.07 million. Solid Power, Inc. (NASDAQ:SLDP) expects to have total cash, cash equivalents, marketable securities, and long-term investments of between $460 million to $470 million at the end of this year.

On December 14, Citi analyst P.J. Juvekar initiated coverage of Solid Power, Inc. (NASDAQ:SLDP) with a Neutral rating and a $3 price target. Solid-state batteries, while promising, face a challenging path to commercialization by 2026, with potential for delays and technology risk, the analyst told investors in a research note. Longer term, there is no doubt that the Inflation Redaction Act bill will quicken EV adoption in the U.S. and automakers will be keen to bring new technologies like solid state, noted the analyst. 

According to Insider Monkey’s third quarter database, 15 hedge funds were long Solid Power, Inc. (NASDAQ:SLDP), compared to 17 funds in the preceding quarter. Ken Griffin’s Citadel Investment Group held the largest position in the company, consisting of 688,515 shares worth $3.6 million. 

6. FREYR Battery (NYSE:FREY)

Number of Hedge Fund Holders: 22

FREYR Battery (NYSE:FREY) is focused on the production and sale of battery cells for stationary energy storage, electric mobility, and marine applications in Europe and internationally. The company designs and manufactures lithium-ion based battery cell facilities. On December 1, FREYR Battery (NYSE:FREY) announced the pricing of its upsized underwritten public offering of 20 million ordinary shares, without nominal value. Each share is being offered at $11.50 per share and the gross proceeds to FREYR from the offering are expected to be $230 million.

On October 31, Cowen analyst Gabe Daoud initiated coverage of FREYR Battery (NYSE:FREY) with an Outperform rating and no price target. Lithium-ion battery tailwinds have only increased in the last year due to supportive policies and additional auto announcements and battery JVs underscoring the significance of battery supply chains, the analyst told investors. He called FREYR Battery (NYSE:FREY) “a de-SPAC that has less technology risk than other startups,” noting that it stands out as a well-positioned advanced lithium-ion battery company. 

According to Insider Monkey’s data, 22 hedge funds were long FREYR Battery (NYSE:FREY) at the end of September 2022, compared to 16 funds in the prior quarter. The collective stakes held by elite funds in Q3 increased to $381.2 million from $205.2 million in Q2 2022. Daniel Patrick Gibson’s Sylebra Capital Management is the leading stakeholder of the company, with 12.80 million shares valued at $182.3 million. 

In addition to Tesla, Inc. (NASDAQ:TSLA), General Motors Company (NYSE:GM), and Ford Motor Company (NYSE:F), smart investors are piling into FREYR Battery (NYSE:FREY) for exposure to the battery industry.

5. Samsung Electronics Co., Ltd. (KSE:005930.KS)

Number of Hedge Fund Holders: N/A

Samsung Electronics Co., Ltd. (KSE:005930.KS) is a South Korean company engaged in the consumer electronics, information technology, mobile communications, and device solutions businesses worldwide. Samsung SDI supplies a significant number of batteries to Samsung Electronics for its products, in addition to providing solid state electric vehicle batteries. On October 27, Samsung Electronics Co., Ltd. (KSE:005930.KS) posted a Q3 GAAP EPS of KRW1.35 and a revenue of KRW76.78 trillion, up 3.8% year-over-year. It is one of the best battery stocks to buy heading into 2023. 

4. Ford Motor Company (NYSE:F)

Number of Hedge Fund Holders: 47

Ford Motor Company (NYSE:F) is a Michigan-based company that designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide. On July 21, Ford Motor Company (NYSE:F) announced that it will supply 60 gigawatt hours (GWh) of annual battery capacity to deliver a global 600,000 EV run rate by late 2023. Lithium iron phosphate battery packs will also be introduced for Mustang Mach-Es sold in North America next year and F-150 Lightnings in early 2024. It is one of the best battery stocks to consider. 

On December 15, Ford Motor Company (NYSE:F) and China-based Contemporary Amperex Technology announced that they are considering a potential plan to construct a battery plant in Michigan or Virginia to provide lithium iron phosphate batteries for electric models and still qualify for tax credits under the Inflation Reduction Act.

Citi analyst Itay Michaeli on November 30 raised the price target on Ford Motor Company (NYSE:F) to $14 from $13 and kept a Neutral rating on the shares. The analyst updated his model to reflect the Q3 results and latest data points. 

According to Insider Monkey’s data, Ford Motor Company (NYSE:F) was part of 47 hedge fund portfolios at the end of Q3 2022, compared to 46 in the prior quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with nearly 45 million shares worth $503.6 million. 

Here is what Leaven Partners has to say about Ford Motor Company (NYSE:F) in its Q3 2022 investor letter:

“In our last quarterly letter, I briefly mentioned that the consensus estimates for corporate profits appeared to be a bit too sanguine. I referenced a Reuters article that reported, as of June 17, Wall Street expected S&P 500 earnings to grow by 9.6% in 2022, which was up from 8.8% in April and from 8.4% in January. That tune began to change at the end of July and accelerated in August and September, as major players, such as Ford (NYSE:F), has recently issued profit warnings and/or have withdrawn guidance. In response, Wall Street has altered its outlook: lowering third-quarter profit growth to 4.6% from 7.2% in early August and slashing full-year profit growth to 4.5%.”

3. Albemarle Corporation (NYSE:ALB)

Number of Hedge Fund Holders: 49

Albemarle Corporation (NYSE:ALB) is a North Carolina-based company that develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments – Lithium, Bromine, and Catalysts. The Lithium segment provides lithium compounds for use in lithium batteries for consumer electronics and electric vehicles. Albemarle Corporation (NYSE:ALB) is one of the premier battery stocks to buy for next year. 

On December 13, Albemarle Corporation (NYSE:ALB) announced that it has acquired a location in Charlotte, North Carolina, where it will invest at least $180 million to establish the Albemarle Technology Park. Albemarle Corporation (NYSE:ALB) expects innovations from the technology park to advance lithium recovery, improve production, and introduce new types of lithium to allow record levels of battery performance.

Citi analyst P.J. Juvekar on December 15 maintained a Buy recommendation on Albemarle Corporation (NYSE:ALB) but lowered the firm’s price target on the shares to $295 from $345. The analyst is not turning negative on lithium, but is making more of a short-term call. He expects lithium demand to continue to grow nearly 20% annually into 2030 and supply will struggle to catch up. 

According to Insider Monkey’s data, 49 hedge funds were bullish on Albemarle Corporation (NYSE:ALB) at the end of Q3 2022, compared to 39 funds in the earlier quarter. Israel Englander’s Millennium Management is the biggest position holder in the company, with 603,396 shares worth $159.5 million. 

Carillon Tower Advisers made the following comment about Albemarle Corporation (NYSE:ALB) in its Q3 2022 investor letter:

“Albemarle Corporation (NYSE:ALB) is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The company’s shares outperformed meaningfully in the quarter, driven largely by robust demand for lithium used to manufacture electric vehicle batteries. Albemarle is well-positioned for the accelerating adoption of electric vehicles and could benefit from the Inflation Reduction Act.”

2. General Motors Company (NYSE:GM)

Number of Hedge Fund Holders: 74

General Motors Company (NYSE:GM) designs, manufactures, and sells trucks, crossovers, cars, and automobile parts and accessories in North America, the Asia Pacific, the Middle East, Africa, South America, the United States, and China. On December 2, General Motors and LG Energy Solution disclosed that they will spend an additional $275 million in their joint venture battery plant in Tennessee to increase production by more than 40%. The new investment follows the $2.3 billion announced in April 2021 to construct the 2.8 million square-foot facility. It is one of the best battery stocks to invest in. 

On November 18, Wedbush analyst Daniel Ives told investors that General Motors Company (NYSE:GM)’s Investor Day event was “impressive” and that it was a “check up” on GM’s electrification strategy and update for the Street around advancements on that vision. The analyst noted that GM “easily could have been more cautious” around targets, battery production, and overall demand looking ahead for the coming years, but instead management “came out swinging” as General Motors Company (NYSE:GM) is very confident in its long-term EV targets. The company also reinforced its ambition through 2030 as the Ultium battery ecosystem has been buzzing despite global production/component problems.

According to Insider Monkey’s data, 74 hedge funds were long General Motors Company (NYSE:GM) at the end of the third quarter of 2022, compared to 75 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway held the largest position in the company, comprising 50 million shares worth $1.60 billion. 

Diamond Hill made the following comment about General Motors Company (NYSE:GM) in its Q3 2022 investor letter:

“Most recently, we initiated a position in General Motors Company (NYSE:GM), one of the largest automakers in the United States. Over the past several years, GM has taken steps necessary to focus the company on the most profitable segments and move into position to compete in an electrified and autonomous world. With the recent rise in interest rates there was a meaningful selloff in the auto industry, which presented us with an attractive entry point to a name we know well.”

1. Tesla, Inc. (NASDAQ:TSLA)

Number of Hedge Fund Holders: 88

Tesla, Inc. (NASDAQ:TSLA) is a Texas-based company that manufactures, leases, and sells electric vehicles, energy generation systems, and battery storage solutions. Tesla provides Powerwall, an integrated battery system that stores solar energy for backup protection, so when the grid goes down, the power stays on. Tesla, Inc. (NASDAQ:TSLA) is one of the leading battery stocks to consider buying. 

For the EV sector, Morgan Stanley estimated global EV sales of 9.7 million units and global EV penetration of 11.8% in 2023, compared to 10.1% in 2022. Looking at the 2023 setup, Morgan Stanley maintained an Overweight rating on Tesla, Inc. (NASDAQ:TSLA), noting that it is one of the long-term winners in the sector.

According to Insider Monkey’s data, Tesla, Inc. (NASDAQ:TSLA) was part of 88 hedge fund portfolios at the end of September 2022, compared to 73 in the last quarter. Cathie Wood’s ARK Investment Management is a significant position holder in the company, with 4 million shares worth over $1 billion. 

In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Tesla, Inc. (NASDAQ:TSLA) was one of them. Here is what the fund said:

“In 2014, before we began to invest in Tesla (NASDAQ:TSLA), I called Roger to ask whether he thought Elon Musk’s electric car business would succeed. I did not believe that Roger, an owner of dealerships that sell cars powered by internal combustion engines (ICE) would likely have a favorable opinion of Tesla’s prospects. That was principally for two reasons:

First, automobile manufacturing and distribution is unusually complicated, capital intensive, and highly regulated, which makes profitability problematic; second, cars with ICE motors require extensive annual maintenance, and dealer services revenues, not profits from automobile sales, are the most important contributor to profits of perpetual licensed ICE car dealerships.

Penske Automotive Group is principally an ICE car dealer. Since electric cars are powered by batteries and need little service, franchised dealerships are incented to sell ICE, not EV automobiles. Further, Roger had been a long-term director of General Motors. General Motors’ ICE automobile business would be disrupted if Tesla were successful. (click here to read more…)

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Disclosure: None. 10 Best Battery Stocks To Buy Heading Into 2023 is originally published on Insider Monkey.