Hyliion: An Ev Option With Lots Of Promise
Other companies like Hyliion in the EV space have made headlines of late as the EV makers of the future.
Well, Hyliions business model is in providing hybrid/EV powertrain solutions for Class 8 vehicles. These are primarily the semi trucks which have yet to be tackled by most EV makers, due to the complexities involved with charging such batteries for long-haul trucking.
However, Hyliion claims to have made some significant progress in this regard. Similar to QuantumScape, Hyliion announced a next generation battery module it believes has the potential to enable longer battery life, higher charging rates and improved safety.
These improvements are certainly beneficial to the investment thesis in companies like Hyliion.
However, the recent QuantumScape news has prompted skepticism with respect to how commercially-ready these technological breakthroughs are. Accordingly, shares of HYLN stock have been cut more than in half since the announcement two months ago.
Indeed, investors appear impatient with story stocks like QuantumScape and Hyliion right now. Improvements in battery technology are coming, but investors seem to want to invest in whats making change right here and now.
Which brings me to my top pick in this space.
Best Battery Stocks: Albemarle
Charlotte, North Carolina-based chemical manufacturer Albemarle is another battery stock that is worth owning. And unlike the other companies on this list, ALB stock has been killing it this year, up 83% since January at $274.43 a share. In the past 12 months, the stock has nearly doubled.
The sharp increase has been due to huge demand for the lithium and bromine chemicals that Albemarle produces which are used to manufacture batteries for electric vehicles and other products. Albemarle has operations around the world and is the largest global provider of lithium for electric vehicle batteries.
In its most recent quarter, Albemarle reported earnings per share of $3.62 which was four times bigger than the $0.80 per share the company earned in the same quarter of 2020, which showcases the huge demand for its products. In September, Albemarle took a big step towards further increasing its lithium production output by acquiring the Chinese company Guangxi Tianyuan New Energy Materials for $200 million. The deal is expected to close early next year and should help Albemarle further cement its position as the leader when it comes to lithium and bromine chemical production.
On the date of publication, Joel Baglole did not have 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.
©2023 InvestorPlace Media, LLC
New Sample Issue Of Insider Monkeys Monthly Newsletter And 1 Free Stock Pick
Published on October 26, 2022 at by Inan Dogan, PhD
Warren Buffett never mentions this but he is one of the first hedge fund managers who unlocked the secrets of successful stock market investing. He launched his hedge fund in 1956 with $105,100 in seed capital. Back then they werent called hedge funds, they were called partnerships. Warren Buffett took 25% of all returns in excess of 6 percent.
For example S& P 500 Index returned 43.4% in 1958. If Warren Buffetts hedge fund didnt generate any outperformance , Warren Buffett would have pocketed a quarter of the 37.4% excess return. That would have been 9.35% in hedge fund fees.
Actually Warren Buffett failed to beat the S& P 500 Index in 1958, returned only 40.9% and pocketed 8.7 percentage of it as fees. His investors didnt mind that he underperformed the market in 1958 because he beat the market by a large margin in 1957. That year Buffetts hedge fund returned 10.4% and Buffett took only 1.1 percentage points of that as fees. S& P 500 Index lost 10.8% in 1957, so Buffetts investors actually thrilled to beat the market by 20.1 percentage points in 1957.
As you can guess, Warren Buffetts #1 wealth building strategy is to generate high returns in the 20% to 30% range.
So, how did Warren Buffett manage to generate high returns and beat the market?
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Top Battery Stocks To Invest In
Battery stocks are underestimated by investors due to a number of issues that discourage them from buying the shares of companies specializing in energy storage solutions. However, with the growing demand for long-cycle EV batts as well as efficient small-sized batts for portable electronic devices, the sector seems very promising for future investments.
Like any other sector, battery stocks have a considerable challenge to select the proper firm worth your investment. No company is protected from potential failures, but to reduce the risks lets take a look at the most promising players in the battery industry.
Ganfeng Lithium Chinas Largest Lithium Compounds Producer
Ganfeng Lithium is a Chinese company focused on providing Lithium-ion batteries for electric vehicles, mobile phones, headphones, and more. They create batteries for consumer electronics, energy storage systems, and vehicles.
Although Ganfeng Lithium clearly specializes in its namesake , it also works with solid-state batteries. The corporation focuses heavily on production, developing a chemical and lithium battery research center.
Here they cover research for synthesis, materials, smelting, alloy, power and energy storage, and battery recycling.
Even if youre not really into the nitty-gritty details of battery development, suffice it to say that the company is set for growth through innovation and research. Its a solid choice for your portfolio.
There are musings that this stock gets overvalued. However, its profitability still seems strong.
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The Best Lithium Stocks
When you look across the publicly traded lithium market, its hard to find a pure play lithium stock. Even among the lithium producers, each has separate and essential operations in other areas.
Even an ETF focused specifically on lithium casts a wide net in various industries.
On the mining side, you have the Big 3 and a group of Chinese companies working to take a significant share.
In general, the mining side looks somewhat interesting from an economic standpoint due to the inelastic demand for raw materials. However, we note that any kind of mining, including lithium, is generally highly cyclical due to inevitable pricing and demand swings.
Because lithium is essential but not a huge cost driver in battery production, battery makers are unlikely to significantly reduce their consumption even in the face of higher lithium prices.
While miners cannot dictate higher prices alone, they are likely to benefit from higher prices if they come about from supply shortages / faster demand growth.
In our view, SQM and Albemarle look like the most exciting lithium stocks on the mining side due to their premium position in Chile a position offering the deepest reserves coupled with high concentrations and an ideal environment.
On the battery side, finding pure play lithium stocks is even more challenging. There are plenty of companies in the market, but from an investment standpoint, there is still a lot of uncertainty.
Investing In Battery Technology
If and when battery technology takes off in these exciting new directions, it will lower the cost of production for consumer electronics and for electric vehicles such as those produced by Tesla Motors . Tesla recently announced construction of a ‘gigafactory‘ to not only produce more vehicles but also produce its own LiOn batteries in house, in conjunction with Japanese electronics giant Panasonic . By taking the battery production problem into their own hands, Tesla may have found a great way to gain investment exposure to both electric cars and battery tech.
The battery technology market is somewhat myopic with new technologies, developments and partnerships catapulting the industry forward. Visiongains Top 20 Lithium-Ion Battery Manufacturing Companies Report 2018 provides a great deal of insight on the battery technology market and its top manufacturers. Companies in the report include the following:
- A123 Systems Inc.
- Automotive Energy Supply Corporation
- Aviation Industry Corporation of China
- Comtemporary Amperex Technology Ltd
- GS Yuasa Corporation
- Hefei Guoxuan High-tech Power Energy Co., Ltd
- Hitachi Chemical Co., Ltd.
- TDK Corporation/Amperes Technology Ltd
- Tianjin Lishen Battery Joint-Stock Co., Ltd.
- Tianneng Power International Ltd
- Toshiba Corporation
Other notable names in the battery industry include the following:
- FMC CORP 18.06%
- SIMPLO TECHNOLOGY CO LTD 4.24%
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You’ll Kick Yourself 5 Years From Now If You Miss This
The world’s richest investors – like Kevin O’Leary of “Shark Tank” and big banks like Morgan Stanley – have started investing in this groundbreaking new market.
Early estimates say it could soar 40,000% in the next few years, minting fortunes for folks who act now.
One investor has already pulled in $316 million.
Join over 500,000 readers and get free daily updates on the best ways to make money. Subscribe to Money Morning.
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Investors Should Beware Blind Spots
Drawing on experience investing in other emerging technologies, Morgan Stanley analysts outlined a roadmap for investors navigating new adoption cycles. Early in the cycle, enablers of a new technology tend to lead the way. Subsequently, value creation shifts to the infrastructure and device makers with higher penetration. Toward the end of the cycle, opportunities shift to software and services companies that are able to capitalize on the growth of EVs.
Still, there are many unknowns and risks to navigate along the way. The battery industry is highly complex with dozens of mini self-reinforcing and some self-correcting supply/demand curves to take into consideration, says Jonas. Indeed, many of the same factors that are driving the bull case for EV penetration could ultimately pose risks for todays battery incumbentsas was the case for solar, LED and other emerging industries.
The Morgan Stanley Global Battery team has identified four potential blind spots, including excess investment, the balkanization of the battery business, OEM vertical integration, and obsolescence risk on the way to cell and manufacturing breakthroughs.
In fact, lithium-ion batteries could ultimately be replaced by new technologies. The battery of the future may not even look like a cube or a cylinder. It could look like an airplane wing, car body, or phone case with a thin sheet of woven glass that separates the two electrodes.
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Lithium Battery Stock: Panasonic
Panasonic provides EV batteries for the worlds automakers, with Tesla as its most notable customer. However, this is only one portion of the Japanese business. Panasonics operating segments include Automotive & Industrial Systems, Eco Solutions, Connected Solutions, Appliances, and Others.
As a general theme, earnings have been volatile. Panasonic is a diversified business, going well beyond the lithium battery market, with arms in electronic component mounting, appliances, and home building products.
This benefits safety , but it can also dilute the growth potential a pure play lithium battery maker might have.
Still, Panasonic is well-positioned in the industry.
Quantumscape Invest In The Future Of Ev Batteries
QuantumScape is a startup focusing on researching and developing all-solid-state batteries.
The solid-state battery that QuantumScape wants to create can charge in less than 15 minutes and is safer than lithium-ion.
It costs significantly less to manufacture due to eliminating anode host material and increasing energy density in the same way. This leads to a longer useful lifetime because there is no capacity loss at the anode interface.
All of this is technical, but suffice it to say that by eliminating some of the more troublesome materials, solid-state automotive batteries improve overall safety and decrease the cost of manufacture.
Solid-state batteries are the next big thing in EV battery technology, and if you want in on this exciting development, QuantumScape is worth consideration.
Because no solid-state batteries are being produced at scale, choosing to invest in QuantumScape is a little riskier.
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Global Energy Prices: Gasoline
Which countries and regions pay the most for a gallon of gas?
At an average $11.10 per gallon, households in Hong Kong pay the highest for gasoline in the worldmore than double the global average. Both high gas taxes and steep land costs are primary factors behind high gas prices.
Like Hong Kong, the Central African Republic has high gas costs, at $8.60 per gallon. As a net importer of gasoline, the country has faced increased price pressures since the war in Ukraine.
Households in Iceland, Norway, and Denmark face the highest gasoline costs in Europe. Overall, Europe has seen inflation hit 10% in September, driven by the energy crisis.
Battery Market Has Shifted Into High Gear
Battery technology has been around for more than two centuriesbut the last decade has marked a major turning point for batteries spurred in no small part by Tesla.
The company opened doors for increased EV adoption, which in turn led to more investments in battery technology, and ultimately cheaper, better batteries. In fact, costs have come a long way since 2010, when battery prices were $1,100/kWh, representing a 90% drop over ten years to about $110/kWh today.
Meanwhile, post-Covid climate polices and environmental, social, and governance mandates have accelerated adoption. The pandemic accelerated the development of the battery economy by at least five, if not 10 years, says Shawn Kim, who heads the Asia Technology research team at Morgan Stanley. The amount of capital investment in batteries is now 10 to 20 times higher than it was pre-Covid.
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Lithium Stocks: Final Thoughts
Most lithium-related stocks have suffered from the revenue growth side and trade heavily based on future growth prospects driven by the green revolution.
Investors should expect these names to be more volatile.
However, despite the potentially larger price swings in the short run, the tailwind of the massive and fundamental shifts in renewable energy is likely to gain even more momentum.
The increasing demand for lithium will continue throughout the next decade.
As more realize the financial incentives for this commodity, we will likely see more investors jump into the market. This makes lithium stocks one of the groups with the most potential for significant price appreciation in the following years.
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Return Comparison Of All Battery Technology Etfs
The table shows the returns of all battery technology ETFs in comparison. All return figures are including dividends as of month end. Besides the return the reference date on which you conduct the comparison is important. In order to find the best ETFs, you can also perform a chart comparison.
Sign up now and take advantage of justETF Premium.
- Historic return simulation of ETF portfolios
- Performance and risk analysis
- 5 portfolios included
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Battery Technology Etfs In Comparison
When choosing a battery technology ETF one should consider several other factors in addition to the methodology of the underlying index and performance of an ETF. For better comparison, you will find a list of all battery technology ETFs with details on size, cost, age, income, domicile and replication method ranked by fund size.
The Bottom Line On Electric Car Battery Stocks
The world is moving toward cleaner energy and renewables. The push toward EVs replacing internal combustion engines is accelerating. This would revolutionize the transportation industry. And it presents a huge opportunity for investors who get in on the transition to EVs early.
However, make sure to do your own research before investing. There are always risks with investing, and returns are never guaranteed. On top of that, there are many investment opportunities out there to consider.
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Best Battery Stocks: Chargepoint Holdings
President Joe Bidens administration is spending $7.5 billion to expand electric vehicle charging to underserved areas of the U.S. And thats good news for Campbell, California-based ChargePoint Holdings, which operates the largest electric vehicle charging station network in America and Europe.
Today, ChargePoint has more than 118,000 charging locations across North America and continental Europe, and its network is growing all the time. The company also boasts more than 5,000 commercial and fleet customers, including three-quarters of Fortune 50 companies.
ChargePoints rapid growth and market leading position is leading to positive financial results. The companys fiscal second-quarter results showed revenue of $56.1 million, up 61% year-over-year. Of that total revenue, $40.9 million came from networked charging, which was up 91% from a year earlier. ChargePoint is doing so well that it raised its full-year guidance by 15% to the midpoint of a $225 million to $235 million range.
Sadly, the companys strong growth and financials are not reflected in its current share price. At $25.60, CHPT stock is down 32% on the year after going public via a reverse merger with a special purpose acquisition company this spring.
Analysts seems to agree that CHPT stock is undervalued. The median price target on the shares is currently $30, suggesting a potential 18% gain from current levels which is good for this battery stock.
Battery Company Stocks Canada
Become a better investor
Time and again, you might have heard the line The Future is Electric. Regardless of how cliched this may sound, it stands true. According to RBC Capital Markets, global Electric Vehicle sales are expected to climb 12 times by 2025, from 3 million units sold in 2016 to 35 million units sold in 2025. This 12-fold increase was fueled by concerns about climate change and government crackdowns on internal combustion engine automobiles as fossil fuels become increasingly expensive.
No matter the reason, the fact of the matter is that the EV revolution is here, and everyone has the opportunity to gain from it.
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Albemarle Corporation One Of The Largest Lithium Suppliers In The World
Albemarle is another company that doesnt manufacture EV batteries, but it is one of the largest lithium suppliers globally. It has operations in the US as well as Chile and Australia.
It also recently acquired the Chinese lithium converter firm Guangxi Tianyuan New Energy Materials Col, Ltd. In addition to lithium, Albemarle also supplies other refining catalysts, bromine, and bromine derivatives.
Because Albemarle has connections globally, they are in an excellent position to supply materials to electric vehicle and EV battery manufacturers. They are a good choice if you are interested in EV stocks but want to expand your investments beyond battery manufacturers.
As with Lithium Americas Corp., this company supplies lithium, used to make current generation batteries. It is prone to the same fluctuations in share value as other raw materials.