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Batteries Serve as 'Secret Sauce' for EVs: 4 Stocks in Focus
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Electric vehicles (EVs) are the future of transportation. For years, it seemed that Tesla (TSLA - Free Report) was the only automaker that was playing at the forefront of the EV phenomenon and taking the concept of green vehicles seriously from a real-world functionality standpoint. However, things are changing as most of the automakers are now fast changing gears to electric. Climate concerns, stringent fuel-economy targets, and advancement in technology as well as charging infrastructure are boosting the environment-friendly EV market.
EV sales across the globe are projected to grow 50% or more in 2021 compared with ICE expected sales growth of a meager 2-5%, as predicted by analysts at Morgan Stanley, quoted in a MarketWatch article. Global EV penetration is projected to jump from 3% to 31% by 2030.
Widespread adoption of e-mobility will have a trickle-down effect in the supply chain, making battery stocks more attractive than ever. Batteries are the most common element of green cars and will play the most important role in accelerating the EV revolution. Battery specs are the cornerstone of an electric vehicle’s performance. Without the right battery technology, the EV industry wouldn’t be able to live up to its hype.
Global EV Battery Market Charged Up
The EV battery space is mostly dominated by Asia, with Contemporary Amperex Technology Co Ltd, LG Chem, BYD Co. Ltd (BYDDY - Free Report) , Panasonic Corp. and Samsung SDI spearheading the game. Riding on the enormous optimism in the battery space and EV frenzy, California-based EV battery maker QuantumScape (QS - Free Report) recently made its NYSE debut. The Bill Gates-backed EV battery supplier is developing the next generation of batteries utilizing lithium metal, which has a significantly higher energy density than lithium ion. Set to disrupt the world of batteries, QuantumScape claims that its batteries are designed to offer up to 80% longer range than the existing lithium-ion batteries. Per the company, its batteries would charge up a vehicle to 80% of its full capacity in around 15 minutes.
Per ReportLinker data, the global market for EV battery is estimated at $30.7 billion in 2020 and expected to witness a CAGR of 16% over the next seven years to reach $87.2 billion. Currently, the most popular source of power in green vehicles is lithium-ion batteries. Notably, the lithium ion battery segment is likely to record a CAGR of 17.7% over the next seven years, with China, the United States of America, Europe, Japan and Canada driving global demand. Amid the upbeat scenario, investors should put battery-related stocks onto their radar.
4 ‘Pick & Shovel’ Stocks to Play the EV Boom
Panasonic Corp.: Panasonic is one of the key players in the development of next-generation lithium-ion batteries for green vehicles. Continuous research and cutting edge technology have kept the company at the forefront of battery development. Its advanced lithium-ion battery tech offers improved energy density, lower costs and improved driving range. Partnerships with auto biggies like Tesla and Toyota (TM - Free Report) are likely to boost the firm’s prospects. Notably, the company is targeting zero cobalt in its battery cells and plans to commercialize cobalt-free batteries in a few years. Panasonic currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its fiscal 2022 earnings indicates a year-over-year increase of 82.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EnerSys (ENS - Free Report) : Headquartered in Pennsylvania, EnerSys engages in manufacturing, marketing and distribution of various industrial batteries. Battery brands of the firm include EnergyCell, NexSys and PowerSafe. Solid product portfolio, new product offerings, acquired assets and shareholder-friendly policies are key strengths of EnerSys. Amid the changing dynamics of the industrial battery landscape, the company remains focused on the development of Thin Plate Pure Lead and advanced Lithium-ion technologies. It currently carries a Zacks Rank #3 (Hold) and has an expected EPS growth rate of 10% for the next three-five years.
Albemarle Corp. (ALB - Free Report) : Considered as the world’s biggest lithium producer, this Charlotte-based company is expected to gain immensely from rising production of electric cars. Albemarle has battery-grade lithium-producing plants in Europe, Australia, China, Chile and the United States. This Zacks Rank #3 firm remains focused on strengthening the lithium business. Even amid the coronavirus crisis, Albemarle managed to surpass earnings and sales estimates in the last reported quarter. The company expects net sales for 2020 between $3.05 billion and $3.15 billion. Solid cost-cut initiatives and investor-friendly moves of the firm are encouraging. The company has an expected EPS growth rate of 11.9% for the next three-five years.
Vale S.A.(VALE - Free Report) : Wondering why this Brazil-based giant miner is also on the list? Well, lithium-ion batteries mostly rely on nickel and Vale is the largest producer of the metal in the world. Most of the EV makers are aiming to eliminate the usage of cobalt in battery cells as the commodity is expensive and instead increase the nickel content. At the Battery Day event, Tesla revealed its intent to increase the nickel content in its battery composition, which would improve the range of vehicles and cut costs. So, the rising popularity of EVs is not just likely to buoy lithium demand but will also jack up nickel demand. Hence, Vale could very well be on your watchlist if you want to tap the EV boom. This Zacks Rank #3 company carries a VGM Score of A and has a long-term expected EPS growth of more than 25%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
Image: Bigstock
Batteries Serve as 'Secret Sauce' for EVs: 4 Stocks in Focus
Electric vehicles (EVs) are the future of transportation. For years, it seemed that Tesla (TSLA - Free Report) was the only automaker that was playing at the forefront of the EV phenomenon and taking the concept of green vehicles seriously from a real-world functionality standpoint. However, things are changing as most of the automakers are now fast changing gears to electric. Climate concerns, stringent fuel-economy targets, and advancement in technology as well as charging infrastructure are boosting the environment-friendly EV market.
EV sales across the globe are projected to grow 50% or more in 2021 compared with ICE expected sales growth of a meager 2-5%, as predicted by analysts at Morgan Stanley, quoted in a MarketWatch article. Global EV penetration is projected to jump from 3% to 31% by 2030.
Widespread adoption of e-mobility will have a trickle-down effect in the supply chain, making battery stocks more attractive than ever. Batteries are the most common element of green cars and will play the most important role in accelerating the EV revolution. Battery specs are the cornerstone of an electric vehicle’s performance. Without the right battery technology, the EV industry wouldn’t be able to live up to its hype.
Global EV Battery Market Charged Up
The EV battery space is mostly dominated by Asia, with Contemporary Amperex Technology Co Ltd, LG Chem, BYD Co. Ltd (BYDDY - Free Report) , Panasonic Corp. and Samsung SDI spearheading the game. Riding on the enormous optimism in the battery space and EV frenzy, California-based EV battery maker QuantumScape (QS - Free Report) recently made its NYSE debut. The Bill Gates-backed EV battery supplier is developing the next generation of batteries utilizing lithium metal, which has a significantly higher energy density than lithium ion. Set to disrupt the world of batteries, QuantumScape claims that its batteries are designed to offer up to 80% longer range than the existing lithium-ion batteries. Per the company, its batteries would charge up a vehicle to 80% of its full capacity in around 15 minutes.
Per ReportLinker data, the global market for EV battery is estimated at $30.7 billion in 2020 and expected to witness a CAGR of 16% over the next seven years to reach $87.2 billion. Currently, the most popular source of power in green vehicles is lithium-ion batteries. Notably, the lithium ion battery segment is likely to record a CAGR of 17.7% over the next seven years, with China, the United States of America, Europe, Japan and Canada driving global demand. Amid the upbeat scenario, investors should put battery-related stocks onto their radar.
4 ‘Pick & Shovel’ Stocks to Play the EV Boom
Panasonic Corp.: Panasonic is one of the key players in the development of next-generation lithium-ion batteries for green vehicles. Continuous research and cutting edge technology have kept the company at the forefront of battery development. Its advanced lithium-ion battery tech offers improved energy density, lower costs and improved driving range. Partnerships with auto biggies like Tesla and Toyota (TM - Free Report) are likely to boost the firm’s prospects. Notably, the company is targeting zero cobalt in its battery cells and plans to commercialize cobalt-free batteries in a few years. Panasonic currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its fiscal 2022 earnings indicates a year-over-year increase of 82.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
EnerSys (ENS - Free Report) : Headquartered in Pennsylvania, EnerSys engages in manufacturing, marketing and distribution of various industrial batteries. Battery brands of the firm include EnergyCell, NexSys and PowerSafe. Solid product portfolio, new product offerings, acquired assets and shareholder-friendly policies are key strengths of EnerSys. Amid the changing dynamics of the industrial battery landscape, the company remains focused on the development of Thin Plate Pure Lead and advanced Lithium-ion technologies. It currently carries a Zacks Rank #3 (Hold) and has an expected EPS growth rate of 10% for the next three-five years.
Albemarle Corp. (ALB - Free Report) : Considered as the world’s biggest lithium producer, this Charlotte-based company is expected to gain immensely from rising production of electric cars. Albemarle has battery-grade lithium-producing plants in Europe, Australia, China, Chile and the United States. This Zacks Rank #3 firm remains focused on strengthening the lithium business. Even amid the coronavirus crisis, Albemarle managed to surpass earnings and sales estimates in the last reported quarter. The company expects net sales for 2020 between $3.05 billion and $3.15 billion. Solid cost-cut initiatives and investor-friendly moves of the firm are encouraging. The company has an expected EPS growth rate of 11.9% for the next three-five years.
Vale S.A.(VALE - Free Report) : Wondering why this Brazil-based giant miner is also on the list? Well, lithium-ion batteries mostly rely on nickel and Vale is the largest producer of the metal in the world. Most of the EV makers are aiming to eliminate the usage of cobalt in battery cells as the commodity is expensive and instead increase the nickel content. At the Battery Day event, Tesla revealed its intent to increase the nickel content in its battery composition, which would improve the range of vehicles and cut costs. So, the rising popularity of EVs is not just likely to buoy lithium demand but will also jack up nickel demand. Hence, Vale could very well be on your watchlist if you want to tap the EV boom. This Zacks Rank #3 company carries a VGM Score of A and has a long-term expected EPS growth of more than 25%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>