In this piece, we will take a look at the 12 best battery stocks to invest in before they take off. If you want to skip our covrerage of all the latest developments in the battery and electric vehicle industry, then you can take a look at the 5 Best Battery Stocks To Invest In Before They Take Off.
The global battery industry, 'powered' by lithium is significantly more important in 2024 than it was in 2014. This is because of the success of Tesla, Inc. (NASDAQ:TSLA) in successfully executing electric vehicle mass production has demonstrated to investors that investing in clean energy stocks can yield favorable results and that electric vehicles have the full potential of being a reality instead of something only in the realm of science fiction.
Yet, just as they do on a smartphone or a laptop, batteries also remain one of the weakest links of modern day electric cars. Smartphones, even those from the multi trillion dollar consumer technology behemoth Apple Inc. (NASDAQ:AAPL), see their batteries degrade over time, even as their other components such as the display or processors are able to perform for years. Similarly, the battery of an electric car made by Tesla or other electric vehicle stocks such as Li Auto Inc. (NASDAQ:LI) is not only one of the most vulnerable components of a car but also one that can be in short supply if there are any fluctuations in the global lithium industry.
Naturally, this means that the global battery industry is not only one of the most valuable in the world but also that it has steady growth ahead of it should the world's plans to phase out internal combustion vehicles bear fruit. Estimates show that the global lithium battery industry was worth $54 billion in 2023, but global macroeconomic troubles left in the wake of the coronavirus pandemic have also shaken up the sector by quite a bit. While previously investors of battery stocks had to keep a close eye on China to ensure that the supply chain of their industry was functioning smoothly, as of February 2024, Canada was the world's preeminent battery supply chain according to Bloomberg's data. This is the first time in history that China has been displaced from the top spot, and it follows a growing global shift towards sustainable and ethical battery sourcing.
What does this mean for battery stocks? Well, this is good news for battery stocks that trade in U.S. exchanges in particular, since not only will American automakers be able to rely on Canada for their battery needs, but tax credit incentives under the Biden-Harris Administration's Inflation Reduction Act (IRA) might also extend to batteries and materials sourced from Canada.
However, even though Canada's rising prominence in the global lithium battery supply chain is a tailwind for battery stocks, they have also entered 2024 on an unstable footing. Their primary high growth market, i.e. electric vehicles, has struggled to operate in a high interest rate and inflation era, so much so that the fourth quarter of 2024 saw electric vehicle king Tesla displaced by the Chinese conglomerate BYD Company Limited (OTC:BYDDF). Tesla's Q4 2023 deliveries stood at 484,507 vehicles, while BYD was able to clock 526,409 in sales for its cheaper electric cars. The duo's tryst is a great example of the cutthroat Chinese market which has seen Tesla and BYD reduce their prices and sacrifice margins to gain market share even if their products make fewer cents on the dollar.
This turmoil in the electric vehicle industry is also present in the global lithium market. Lithium and battery stocks such as Lithium Americas Corp. (NYSE:LAC) and Albemarle Corporation (NYSE:ALB) are down by 31% and 19.29% respectively as lithium prices drop by more than 70% on the back of the simultaneous effects of softer demand and rising supply. The lithium and battery stock price drops come just as U.S. oil giant Exxon Mobil Corporation (NYSE:XOM) might also become a battery stock as it is interested in extracting lithium in Arkansas as part of its bid to become one of the world's biggest lithium suppliers by the end of the decade.
So, as the global battery industry starts to evolve in 2024 and respond to changing macroeconomic conditions, we decided to see which battery stocks are finding favor from hedge funds. Some notable picks are EnerSys (NYSE:ENS), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and Tesla, Inc. (NASDAQ:TSLA).
12 Best Battery Stocks To Invest In Before They Take Off
A close-up of a lithium-ion battery surrounded by a network of silicon nanowires.
Our Methodology
To make our list of the best battery stocks to buy, we ranked the U.S. listed battery stock holdings of the Global X Lithium & Battery Tech ETF, and Amplify Lithium & Battery Technology ETF by their year to date share price performance. Then, the stocks that were down year to date were ranked by the number of hedge funds that had bought the shares during Q4 2023 and the top stocks were selected as the best battery stocks.
For these best battery stocks, we have also mentioned hedge fund sentiment. Hedge funds' top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That's why we pay very close attention to this often-ignored indicator.
12 Best Battery Stocks To Invest In Before They Take Off
12. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Number of Hedge Fund Investors In Q4 2023: 17
YTD Share Price Drop: 26.58%
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is a Chilean chemical company that supplies cathodes and other battery products to battery manufacturers and other companies. As the global lithium industry slows down, the firm has also struggled on the financial front and missed analyst EPS estimates in three out of its four latest quarters,
For their Q4 2023 shareholdings, 17 out of the 933 hedge funds covered by Insider Monkey's research had bought Sociedad Química y Minera de Chile S.A. (NYSE:SQM)'s shares. Ken Griffin's Citadel Investment Group was the firm's biggest investor courtesy of its $30.4 million stake.
SolarEdge Technologies, Inc. (NASDAQ:SEDG), Sociedad Química y Minera de Chile S.A. (NYSE:SQM), EnerSys (NYSE:ENS), and Tesla, Inc. (NASDAQ:TSLA) are some top battery stocks that hedge funds are piling into.
Sigma Lithium Corporation (NASDAQ:SGML) is a Brazilian lithium mining company headquartered in Sao Paulo, Brazil. 2024 is shaping up to be a crucial year for the firm as media reports suggest that Sigma Lithium Corporation (NASDAQ:SGML) and Buffett backed BYD are in talks for deepening their ties.
Insider Monkey's December quarter of 2023 survey covering 933 hedge funds revealed that 18 had held a stake in the firm. Sigma Lithium Corporation (NASDAQ:SGML)'s largest hedge fund investor is Jos Shaver's Electron Capital Partners as it owns $69.7 million worth of shares.
Plug Power Inc. (NASDAQ:PLUG) is an electric vehicle battery technology company that is developing hydrogen based fuel cell systems. Its investors were in for some good news in February 2024 after Roth MKM upgraded the shares to Buy from Hold and increased the share price target to $9 from $4.5.
Insider Monkey took a look at 933 hedge fund portfolios for last year's December quarter and found 19 Plug Power Inc. (NASDAQ:PLUG) shareholders. Vince Maddi and Shawn Brennan's SIR Capital Management owned the biggest stake which was worth $7.7 million.
QuantumScape Corporation (NYSE:QS) is a pure play battery stock that is developing solid state lithium batteries for use in electric vehicles. While the firm's fourth quarter financial results saw it beat analyst loss per share estimates of 34 cents by posting 23 cents in the segment, the shares nevertheless dropped after the results failed to generate any optimism.
By the end of 2023's fourth quarter, 20 out of. the 933 hedge funds tracked by Insider Monkey were the firm's shareholders. QuantumScape Corporation (NYSE:QS)'s largest hedge fund investor is Philippe Laffont's Coatue Management due to its $23.2 million investment.
NIO Inc. (NYSE:NIO) is a Chinese electric vehicle company. While we've tried to avoid car makers in this list of the best battery stocks, it deserves a mention since NIO Inc. (NYSE:NIO) plans to soon start making its own 150 kWh batteries later this year.
Insider Monkey's December quarter of 2023 survey covering 933 hedge funds revealed that 20 had invested in NIO Inc. (NYSE:NIO). Out of these, the biggest stakeholder was Jos Shaver's Electron Capital Partners as it owned $40.1 million worth of shares.
BHP Group Limited (NYSE:BHP) is crucial to the stability of the battery industry since it is one of the biggest mining companies in the world. When it comes to batteries, the firm is responsible for mining and selling crucial metals such as copper and nickel. Its shares are rated Buy on average and the average analyst share price target is $66.45.
During last year's final quarter, 24 out of the 933 hedge funds covered by Insider Monkey had held a stake in the firm. BHP Group Limited (NYSE:BHP)'s largest hedge fund investor is Ken Fisher's Fisher Asset Management as it owns 19.9 million shares that are worth $1.3 billion.
Enovix Corporation (NASDAQ:ENVX) is a pure play battery manufacturer headquartered in Fremont, California. The firm's fourth quarter results weren't helpful for the shares, as they tanked by 2% after Enovix Corporation (NASDAQ:ENVX) reported $7.3 million in revenue and 36 cents loss per share. The revenue beat analyst estimates but the loss per share missed them.
25 out of the 933 hedge funds part of Insider Monkey's Q4 2023 database had invested in Enovix Corporation (NASDAQ:ENVX). Jos Shaver's Electron Capital Partners owned the biggest stake which was worth $40.5 million.
Enovix Corporation (NASDAQ:ENVX) joins EnerSys (NYSE:ENS), SolarEdge Technologies, Inc. (NASDAQ:SEDG), and Tesla, Inc. (NASDAQ:TSLA) in our list of the best battery stocks.
