11 Best Battery Stocks To Buy Before They Take Off

Published on September 30, 2023 at 12:18 pm by Fatima Farooq in Hedge Funds, News

In this article, we will be taking a look at the 11 best battery stocks to buy before they take off. To skip our detailed analysis of the electric vehicle and battery markets, you can go directly to see the 5 Best Battery Stocks To Buy Before They Take Off.

As the global community continues to battle climate change, the demand for more environmentally friendly products and practices is becoming stronger. With climate activists raising awareness on the adverse impacts of conventional gasoline-powered cars on the environment, this demand is also beginning to reverberate in the automotive sector. More and more climate-conscious consumers are beginning to see the efficiency and utility of electric vehicles (EVs), paving the way for electric vehicle and battery manufacturers to cash in on a rapidly growing market.

EV Future: A Fantasy?

While it can be easy for governments and companies to say that they plan to make a complete transition from conventional modes of transportation to electric modes, some individuals are taking the apparent rise of electric vehicles with a grain of salt. It cannot be denied that the complex battery technologies in electric vehicles, and these vehicles themselves, are immensely expensive, making them largely inaccessible for a significant portion of the consumer classes. Considering this, there seems to be some merit to the arguments put forth by those who think that attaining a future of all electric transportation can actually be significantly more difficult, if not impossible, than supporters of electric vehicles think it is. On September 25, Doug Burgum, the Governor of North Dakota, joined CNBC’s “Last Call” to discuss this. Here are some of his comments:

“This idea is a fantasy that we’re gonna have all transportation move to EVs. We have to have liquid fuels and nobody produces liquid fuels cleaner, safer, and smarter than we do here in the United States, and we should be supporting that industry and we should be exporting.”

For Burgum, the answer to the US’ and the global community’s climate crisis is “innovation, not regulation.” He believes that the US can continue its use innovated procedures and technologies like carbon sequestration to make the use of traditional fuels more sustainable for the environment in the long run.

While the views put forth by Burgum may be shared by many others in the US and abroad, it cannot be denied that electric vehicles are still becoming increasingly more prominent in the markets. According to CNBC’s short documentary on electric vehicles from September 11, the electric vehicle market share of global car sales increased from a mere 4% in 2020 to 14% in 2022. Many professionals can also see this number continuing to rise through the years as these vehicles become more and more important for climate preservation. And because these cars are gaining popularity in the global markets today, we can also see the popularity of battery manufacturers rise. Companies like Albemarle Corporation (NYSE:ALB), General Motors Company (NYSE:GM), and Tesla, Inc. (NASDAQ:TSLA), that are actively dedicated to the production of electric vehicles and the batteries used to power them, are thus becoming attractive investment opportunities for investors all over the globe.

Electric Roads: A New Innovation

At the same time, those working on making these vehicles more accessible and convenient to use for consumers are beginning to come up with some solutions for existing problems in the electric vehicle space. For instance, one issue with electric vehicles felt by many consumers is the lack of charging infrastructure not only in the US, but also across the globe. To resolve this issue, power roads are now becoming a hot topic of discussion. These roads are connected to the power grid to enable them to wireless charge electric vehicles as they are driven. An upcoming initiative in Detroit is beginning to take the world by storm with its demonstration of how an electric road works. This innovative solution for the charging infrastructure issue found in the electric vehicle space is just one of many developments that is giving consumers and investors alike some renewed hope for the future of electric vehicle makers alongside battery manufacturers.

Considering the fact that this space is ripe with opportunity and is also being heavily supported by governments across the globe, including the US government, we have compiled a list of some of the top EV battery stocks. These include some of the best solid-state battery stocks as well, considering how these batteries are also gaining popularity in the battery market.

11 Best Battery Stocks To Buy Before They Take Off

Photo by Kumpan Electric on Unsplash

Our Methodology

To select the stocks for our list below, we first screened for stocks that were down year-to-date as of September 29. Then we used Insider Monkey’s hedge fund data for the second quarter to shortlist battery stocks that are popular among hedge funds so far this year. The stocks are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest number.

Best Battery Stocks To Buy Before They Take Off

11. Nikola Corporation (NASDAQ:NKLA)

YTD Returns: -27.02%

Number of Hedge Fund Holders: 7

A Neutral rating was maintained on shares of Nikola Corporation (NASDAQ:NKLA) on July 31 by Michael Shlisky, an analyst at DA Davidson. The analyst also raised his price target on the stock from $1 to $3.

Nikola Corporation (NASDAQ:NKLA) is a construction machinery and heavy transportation equipment company. It is based in Phoenix, Arizona. The company develops and commercializes battery electric vehicles and hydrogen fuel cell electric vehicles, and it is also investing in making battery packs itself.

Our hedge fund data for the second quarter shows seven hedge funds long Nikola Corporation (NASDAQ:NKLA), with a total stake value of $17.1 million.

Holding 40.2 million shares in the company, Antara Capital was the largest shareholder in Nikola Corporation (NASDAQ:NKLA) at the end of the second quarter.

Here’s what Bireme Capital had to say about Nikola Corporation (NASDAQ:NKLA) in its fourth-quarter 2022 investor letter:

“Nikola Corporation (NASDAQ:NKLA), the “manufacturer” of alternative-energy vehicles, was down 31% in Q4 to new all-time lows. Contrary to 2021, the company did book revenues this year. They sold a few hundred trucks. However the company failed to generate even a gross profit, losing $59m before considering costs like marketing, G&A, and depreciation. Nikola has burned about $500m of cash this year but management prudently (albeit partially) financed this by selling over $100m of newly issued stock into the open market. But even with the stock down 75% from its de-SPAC price we think these new investors may never see a positive return.”

10. Li-Cycle Holdings Corp. (NYSE:LICY)

YTD Returns: -24.15%

Number of Hedge Fund Holders: 10

Li-Cycle Holdings Corp. (NYSE:LICY) is a Canadian company that engages in the lithium-ion battery resource recovery and lithium-ion battery recycling business. It offers cathode and anode battery materials like lithium, nickel, and cobalt, among more.

On August 16, a Buy rating and a $7 price target were maintained on shares of Li-Cycle Holdings Corp. (NYSE:LICY) by Brian Dobson, an analyst at Chardan Capital.

There were 10 hedge funds long Li-Cycle Holdings Corp. (NYSE:LICY) in the second quarter, with a total stake value of $93.8 million.

9. Lithium Americas Corp. (NYSE:LAC)

YTD Returns: -4.49%

Number of Hedge Fund Holders: 12

Millennium Management was the most prominent shareholder in Lithium Americas Corp. (NYSE:LAC) at the end of the second quarter, holding 928,652 shares in the company.

Lithium Americas Corp. (NYSE:LAC) is a diversified metals and mining company based in Canada. The company explores for lithium deposits. The company’s explorations make it a large supplier of battery-quality lithium carbonate.

An Overweight rating was maintained on shares of Lithium Americas Corp. (NYSE:LAC) on September 1 by Charles Neivert, an analyst at Piper Sandler. The analyst also placed a price target of $29 on the stock.

There were 12 hedge funds long Lithium Americas Corp. (NYSE:LAC) in the second quarter. Their total stake value in the company was $75.3 million.

This is what Massif Capital said about Lithium Americas Corp. (NYSE:LAC) in its first-quarter 2023 investor letter:

“During the first quarter, Lithium Americas Corp. (NYSE:LAC) had several positive events, including a favorable record of decision ruling for Thacker Pass, paving the way for construction of the mine to start, a revised Thacker resource/cost estimates, and GM’s financing/offtake agreement. Even though LAC is non-producing and its stock is down 34% over the past year (compared to the larger lithium producer’s 3%), the stock remains one of our favorites with multiple catalysts (and still up roughly 600% from our initial purchase price):

Cauchari-Olaroz Stage I first production in sight and Stage II initiation by year-end,

Substantial earthworks beginning 2H23 at Thacker,

Growth potential with greater guidance on Pastos Grandes, and

Formal separation of North American Assets and Argentine assets into separate publicly traded entities

As Cauchari-Olaroz in Argentina and Thacker Pass come online, volumes will effectively be marked at leading-edge pricing. As such, it seems prudent to continue underwriting growth, especially given the firm’s experienced management team with a visible pipeline to incremental supply before 2025. These qualities make one or both post-separation entities attractive buyout targets for numerous suitors…” (Please click here to read the full text)

8. SES AI Corporation (NYSE:SES)

YTD Returns: -23.86%

Number of Hedge Fund Holders: 15

SES AI Corporation (NYSE:SES) is an electrical components and equipment company based in Woburn, Massachusetts. The company develops and produces high-performance lithium-metal rechargeable batteries for electric vehicles, electric vehicle take-off and landing, and other applications.

We saw 15 hedge funds long SES AI Corporation (NYSE:SES) in the second quarter. Their total stake value in the company was $5.3 million.

7. Solid Power Inc. (NASDAQ:SLDP)

YTD Returns: -14.32%

Number of Hedge Fund Holders: 16

Brian Dobson, an analyst at Chardan Capital, reiterated a Buy rating on shares of Solid Power Inc. (NASDAQ:SLDP) on August 10. The analyst also maintained a price target of $5 on the stock.

Solid Power Inc. (NASDAQ:SLDP) was seen in the portfolios of 16 hedge funds at the end of the second quarter, with a total stake value of $8.5 million.

Solid Power Inc. (NASDAQ:SLDP) is an automotive parts and equipment company based in Louisville, Colorado. The company develops solid-state battery technologies for the electric vehicle market. It also sells its sulfide-based solid electrolyte and licenses its solid-state cell designs and manufacturing processes.

Like Albemarle Corporation (NYSE:ALB), General Motors Company (NYSE:GM), and Tesla, Inc. (NASDAQ:TSLA), Solid Power Inc. (NASDAQ:SLDP) is a battery stock many hedge funds are piling into today.

6. FREYR Battery (NYSE:FREY)

YTD Returns: -41.91%

Number of Hedge Fund Holders: 18

FREYR Battery (NYSE:FREY) is an electrical components and equipment company. It produces and sells battery cells for energy storage systems, electric mobility, marine, and aviation applications.

FREYR Battery (NYSE:FREY) had 18 hedge funds long its stock in the second quarter, with a total stake value of $171.7 million.

Like Albemarle Corporation (NYSE:ALB), General Motors Company (NYSE:GM), and Tesla, Inc. (NASDAQ:TSLA), FREYR Battery (NYSE:FREY) is a battery stock that is rapidly gaining popularity among investors.

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