With an accelerating electric vehicle boom, we’re looking at some of the top battery stocks to own now. All as Tesla (NASDAQ:TSLA), Ford (NYSE:F), BMW (OTCMKTS:BMWYY), General Motors (NYSE:GM), and other major automakers accelerate their push into electric vehicles.
General Motors wants to dethrone Tesla and sell only zero-emission vehicles by 2025. Ford wants to sell 600,000 EVs a year by 2023. BMW wants to sell more than two million EVs by 2025. Governments worldwide want millions of EVs on the roads over the next decade. President Biden wants 50% of all new car sales to be EVs by 2030. Europe and China want electric vehicles on their roads as well. One way to profit from that is by buying electric vehicle stocks. One way is by investing in companies that supply batteries or the metals necessary to make them run.
|LIT||Global X Lithium & Battery Tech ETF||$66.75|
|BATT||Amplify Lithium & Battery Technology ETF||$12.58|
One of the best ways to trade the EV boom is with a lithium producer like Albemarle (NYSE:ALB). For one, “Lithium producers must double their output every 2-3 years to keep up with 2030 demand,” Eric Norris, President of Albemarle, said. “No producer has been able to do that reliably to date.” To help, Albemarle has been developing projects in the U.S., Chile, Brazil, Germany, China, Japan, Taiwan, and Australia.
In addition, in its most recent earnings release, the company’s net sales soared 91% to $1.48 billion. Net income came in at $407 million, or $3.46 per diluted share. Adjusted EBITDA of $610 million was up 214%. The company then raised guidance and said it expects to be cash flow positive this year. Better, it declared a quarterly dividend of $0.395 per share, payable on Jan. 3, 2023, to shareholders of record at the close of business as of Dec. 16, 2022.
Lithium Americas (LAC)
Growing lithium demand is also a powerful catalyst for Lithium Americas (NYSE:LAC). Helping construction activities at its Caucharí-Olaroz mine remain on track to achieve the first production this year on the initial 40,000 tonnes per annum operation. In addition, at its Thacker Pass project, results of a Feasibility Study on the first phase of Thacker Pass (for at least 30,000-35,000 tonnes per annum of lithium carbonate) are expected by year-end.
Analysts seem to like the LAC stock, as well. Over the last few weeks, Deutsche Bank raised its price target on the stock to $36 from $33, with a buy rating. Piper Sandler also has an overweight rating on the stock with a price target of $38 a share.
B. Riley analyst Matthew Key also initiated coverage with a buy rating and price target of $41. “Lithium has arguably been the best-performing commodity since the start of 2021, and the strong outlook for electric vehicle sales will support robust pricing over the near term,” Key said, as quoted by TheFly.com.
QuantumScape Corp. (QS)
Beaten down shares of QuantumScape (NYSE:QS) could also help lead the EV battery charge. As one of the top solid-state battery stocks to own, it’s developing a new generation of batteries that could allow EVs to drive thousands of miles on just one charge. Your average EV can get about 250 miles out of a charge.
In addition, according to Yahoo Finance contributor Brian Sozzi,
QuantumScape’s data showed its battery cell could charge to 80% of capacity in 15 minutes. Further, it retains more than 80% of its capacity after 800 charging cycles, is non-combustible, and boasts nearly double the energy density of high-end commercial lithium batteries.
QuantumScape may have developed the battery that addresses some of the biggest problems with electric vehicles: speed to charge and safety. And secondarily, the company’s battery breakthrough may be leveraged across other commercial applications.
As noted by Electrek.co, solid-state batteries could help reduce emissions by as much as 39% compared to lithium-ion batteries. And these batteries could be used in EVs starting in 2025. Ford and BMW will reportedly test them this year.
Solid Power (SLDP)
Another one of the solid-state battery stocks to consider is Solid Power (NASDAQ:SLDP). Reportedly, the company started pilot production of solid-state battery cells, which could offer EVs far more range and shorter recharging times.
A solid-state battery design that can stand up to years of use in an electric vehicle — and that can be mass-produced at reasonable cost — has eluded researchers for decades. That’s expected to change within a couple of years,
Better earnings haven’t been too shabby. As noted by the company, revenue for the second quarter of 2022 was $2.6 million, bringing total revenue for the first half of 2022 to $4.8 million. This compares with revenue of $0.6 million and $1.0 million in the second quarter and the first half of 2021.
Microvast Holdings (MVST)
Another one of the top battery stocks to consider is Microvast Holdings (NASDAQ:MVST), which designs, develops, and manufactures lithium-ion solutions for passenger and commercial electric vehicles to heavy-duty trucks and railways.
Helping Microvast, President Biden recently announced a $2.8 billion award to boost the U.S. supply chain.
According to Energy.gov,
Funded with $2.8 billion through the Bipartisan Infrastructure Law, the portfolio of 21 projects supports new, retrofitted, and expanded commercial-scale domestic facilities to produce battery materials, processing, and battery recycling and manufacturing demonstrations.
With funding, the company will build a separator facility that will supply 19-gigawatt hours of electric vehicle batteries. That separator is an essential part of lithium-ion batteries and a key part of improving EV batteries.
Even better, Oppenheimer analyst Colin Rusch initiated coverage with an Outperform rating and a price target of $8 a share. Rusch views Microvast as a “pioneering battery material company, innovating around the molecular structure of critical battery composition to improve battery performance and reduce material use,” as also noted by TheFly.com.
Global X Lithium & Battery Tech (LIT)
Or, if you’re looking to diversify at less cost, look at the Global X Lithium & Battery Tech (NYSEARCA:LIT). With an expense ratio of 0.75%, the LIT ETF invests in the full lithium cycle, from mining and refining the metal, through battery production. Some of its top holdings include Albemarle, TDK Corp. (OTCMKTS:TTDKY), Panasonic Holdings (OTCMKTS:PCRFY), BYD Co. (OTCMKTS:BYDDY), Tesla Inc., Allkem Ltd. (OTCMKTS:OROCF), Livent Corp. (NYSE:LTHM), Piedmont Lithium (NASDAQ:PLL), and Standard Lithium (NYSEAMERICAN:SLI) to name a few.
Amplify Lithium & Battery Technology ETF (BATT)
Moreover, you can look into Amplify Lithium & Battery Tech ETF (NYSEARCA:BATT), which generates “…revenue from the development, production and use of lithium battery technology, including: 1) battery storage solutions, 2) battery metals & materials, and 3) electric vehicles,” according to Amplify ETFs.
In addition, the BATT ETF has an expense ratio of 0.59% and provides solid exposure to battery stocks. What’s great about an ETF like BATT is that it offers solid diversification at less cost. At the moment, BATT trades around $18 a share, and offers exposure to Tesla, BHP Group (NYSE:BHP), Nio Inc., Glencore (OTCMKTS:GLNCY), XPeng Inc. (NYSE:XPEV), Albemarle Corp., Li Auto (NASDAQ:LI), China Molybdenum (OTCMKTS:CMCLF), Piedmont Lithium, and dozens more.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.