The automobile industry has undergone a significant shift over the last decade with electric vehicles (EVs) becoming increasingly popular. With the global push toward a cleaner, greener future, the demand for EVs has skyrocketed. Along with the surge in EVs, there has been a significant increase in demand for high-performance batteries. This demand has created an opportunity for investors to capitalize on the growth of the EV industry and the battery market.
With longest-lasting, farthest-driving and affordable batteries being the key parameters of the race in the EV market, stocks like BYD. Co. (BYDDY – Free Report) , EnerSys (ENS – Free Report) and Panasonic Corp. (PCRFY – Free Report) and QuantumScape (QS – Free Report) look promising amid the EV boom.
Booming Prospects of EV
Electric vehicles are the future of the automobile industry. Countries across the globe have set ambitious goals to phase out traditional combustion engines, leading to an increase in demand for electric vehicles. In 2021, the Biden administration proposed a $174 billion investment to boost the EV market, including incentives for manufacturers and consumers. In Europe, several countries have already set a deadline to phase out the production of gasoline and diesel vehicles, and China is expected to lead the way in EV sales.
BloombergNEF forecasts global EV vehicle sales to jump from 6.6 million units in 2021 to 20.6 million units in 2025. As more electric vehicles take to the road in the coming days, demand for batteries will only increase. Batteries are the most common element of green cars and will play the most important role in accelerating the EV revolution.
Battery Market to Flourish
The battery market is set to benefit significantly from the boom in the EV industry. The demand for high-performance batteries has increased and this trend is expected to continue. According to a report by BloombergNEF, the global demand for batteries is expected to grow eightfold by 2030. This growth is fueled by the demand for electric vehicles, grid storage, and renewable energy.
Per Polaris Market Research, the global EV battery market was valued at $50.12 billion in 2021 and is expected to witness a CAGR of 18.9% between 2022 and 2030. Currently, the most popular source of power in green vehicles is lithium-ion batteries. Per MarketsandMarkets Research, the global lithium-ion battery market is likely to record a CAGR of 13.1% between 2022 and 2031. Amid the upbeat scenario, investors should put battery-related stocks on their radar.
Stocks to Consider
BYD is a Chinese automobile manufacturer that produces electric vehicles and batteries. The company has seen significant growth in recent years, with revenues increasing by 96% in 2022. The firm’s rechargeable battery business provides lithium-ion and nickel batteries that are essential for the development of green vehicles. Solid execution capabilities and expansion efforts outside China, particularly in the European market, will further fuel the stock.
BYD currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2023 and 2024 earnings implies year-over-year growth of 175% and 27%, respectively. The consensus mark for the 2023 and 2024 bottom line has been upwardly revised by 50 and $1.05 over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Enersys is a leading manufacturer of batteries for a wide range of applications, including automotive, aerospace, and defense. Battery brands of the firm include Odyssey, NexSys and PowerSafe among others. A solid product portfolio, continuous innovation and new product offerings are key strengths of EnerSys. The NorthStar acquisition has further boosted EnerSys’ prospects. Enersys has seen steady revenue growth over the years, with revenues increasing by 12.7% in fiscal 2022.
ENS currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2023 and 2024 earnings implies year-over-year growth of 9.6% and 25.2%, respectively. The consensus mark for fiscal 2023 and 2024 bottom line has been upwardly revised by 11 and 8 cents, respectively, over the past 90 days.
Panasonic is a Japanese electronics company that has a significant presence in the battery market. 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 are likely to boost the firm’s prospects
PCRFY currently carries a Zacks Rank #3. The Zacks Consensus Estimate for fiscal 2024 sales and earnings implies year-over-year growth of 4.3% and 27%, respectively. The company has surpassed the earnings estimates in three of the trailing four quarters and missed once, the average surprise being 15%.
QuantumScape is an American battery technology company that develops solid-state batteries for electric vehicles. The company went public in November 2020 and is backed by Volkswagen.Leveraging lithium-metal technology, QS’ batteries charge up a vehicle to 80% of its full capacity in around 15 minutes. QuantumScape’s next-generation cutting-edge batteries have been revolutionizing the EV space.
QS aims to achieve ranges of 300 miles or more, hyper-fast charging (less than 15 minutes), cheap vehicles (less than $30k) and extended battery life (more than 150,000 miles), thus accelerating the race to mass EV adoption. The stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2023 bottom line is set to improve 5.3%.
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