1. Enovix Corporation (NASDAQ:ENVX)
Share Price Upside: 187%
Number of Hedge Fund Investors In Q2 2024: 22
Average Analyst Share Price Target: $30.3
Enovix Corporation (NASDAQ:ENVX) is an American company that makes batteries for consumer electronics, industrial use cases, and electric vehicles. This provides it with considerable exposure to a variety of industries, from the high growth EV sector, to the vast market of consumer electronics. At the same time, it also leaves Enovix Corporation (NASDAQ:ENVX) competing in a highly competitive industry with incumbents with decades of experience. This means that the firm has to develop competitive and differentiated products if it is to thrive, survive, and grow. On this front, Enovix Corporation (NASDAQ:ENVX) has some advantages, such as 100% silicon anodes in its batteries. Not only does this increase battery efficiency, but it also relaxes some of the constraints that battery manufacturers face from the copper supply chain. Enovix Corporation (NASDAQ:ENVX) aims to start high volume manufacturing by 2024 end, and the firm has already signed an agreement with a Fortune 200 company. Yet, expanding manufacturing is a tricky endeavor and Enovix Corporation (NASDAQ:ENVX) could face headwinds on this front. Oppenheimer shares that the firm is a “pioneer in the commercialization of silicon anode technology with defensible IP in product architecture and manufacturing processes which are enabling new form factors, functionality, and end-markets for its customers.”
Massif Capital mentioned Enovix Corporation (NASDAQ:ENVX) in its Q2 2024 investor letter. Here is what the firm said:
“Turning back to Enovix, the investment thesis at 10,000 feet has always been that if the company can produce the unique silicon anode battery it has developed at scale, management will bring to market a battery that, at worst, is an incremental improvement over what is currently available. This, in turn, leads to demand and the opportunity for premium pricing and superior cash flow compared to other battery producers.
This year, Enovix management has advanced the company toward realizing this thesis in two ways. First, the management team has significantly progressed the build-out of the firm’s first manufacturing line. Second, the management team continues to build out its future customer base, which adds credibility to management’s claim that they can produce a unique silicon anode battery at scale, which still is an unproven claim but one that is fast approaching a point at which it will be proven.
While management has advanced the firm’s business, it is worth highlighting that it is still a pre-revenue company that has yet to produce a product at scale. This means that the spread of values for the business remains very wide, and the potential for market participants to misprice that value is exceedingly high. As such, we have continued to sell both put and call options on ENVX when the premium on offer in option markets is compelling. Given the stock volatility, the premium is often appealing. Our latest effort, a series of call positions entered shortly after the end of the second quarter, yielded a premium that reduced our average entry price by 9% and only resulted in a change in our position size at prices we would want to trim our position at anyway.”
ENVX tops Oppenheimer’s top stocks when it comes to analyst upside. But our conviction lies in the belief that some 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 ENVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and insiders. Please subscribe to our free daily e-newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
