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2 Lithium Battery Stocks Priced Under $10 to Profit from Tesla’s ‘New Oil’ Perspective
Recently, data was considered the modern-day equivalent of oil by trendwatchers of the 21st century. However, Elon Musk has proposed a fresh perspective by suggesting that lithium batteries should be considered “the new oil.” This notion has led to Tesla’s plan to construct a lithium refinery in Corpus Christi, Texas, with a budget of $375 million. The aim is to produce more domestic battery-grade lithium than what is currently obtainable throughout North America. Since lithium plays a crucial role in powering Tesla’s automobiles, which are bound to gain widespread recognition in the future, this investment garners much interest. Apart from Tesla, other startups are also looking to invest heavily in the lithium trend, creating plentiful opportunities to get ahead of the game. To that end, we examined two lithium battery stocks, priced under $10, that some Wall Street analysts believe could emerge as winners in the expanding field. Let’s explore their potential.
MVST, also known as Microvast Holdings, is a leading company in lithium-ion battery technology. Its battery solutions are designed for electric vehicles ranging from small cars to heavy-duty trucks and buses. The company also provides a range of services, including battery system design, testing and validation, and after-sales support, with operations in China, Germany, and the US. Although Q1 earnings are due to be reported, it is worth noting that revenue for the full year 2022 was $204.5m, 35% higher than in 2021. While shares have fallen 66% over the past year, an analyst suggests that this presents a compelling entry point. The company has a healthy balance sheet and a capacity expansion plan, while also benefiting from industry grants and incentives. Currently, the stock has a Moderate Buy consensus, based on just two recent ratings, with a target price of $8, a huge 572% higher than the current price.
Li-Cycle Holdings is a prominent name in the lithium battery space, specializing in advanced lithium-ion battery resource recovery. The company’s principal focus is on recycling lithium-ion batteries by reintroducing the materials back into the supply chain. Through its proprietary technology, Li-Cycle has recorded a remarkable achievement in recovering up to 95% of the materials used in the battery manufacturing process, including valuable metals such as lithium, cobalt, and nickel. The company has also secured multiple partnerships with well-known entities such as Kion, Glencore, and Renewance. Li-Cycle’s financial year-end was changed from October 31st to December 31st, and the latest report from November-December 2022 has shown a year-over-year revenue increase of 53.6% to $5.9 million. However, the adjusted EBITDA loss widened from $8.5 million to $17.8 million. Recently, the company won the Bloomberg New Energy Finance (BNEF) Pioneers Award for 2023 in the “Sustainable Metals and Materials for an Electrified Future” category for its patented Spoke & Hub technology. Analyst Alexander Potter from Piper Sandler has a bullish perspective on Li-Cycle’s future, given the company’s essential service offering.
According to a 5-star analyst, the transportation and energy markets are evolving in uncertain ways, but it is widely accepted that battery recycling will be essential. The analyst believes that Li-Cycle (LICY) is a worthwhile investment option in this sector due to the company’s multi-year head start, expanding list of strategic partners, and $375M loan from the Department of Energy, which has helped to de-risk the company’s balance sheet and fund its expansion. The analyst maintains a Buy rating and a $10 price target, indicating a 95% upside potential. Additionally, a total of seven analysts have provided reviews of LICY, resulting in a Moderate Buy consensus rating, with five Buys and one Hold and Sell each. LICY shares are currently trading at $5.05, and the $7.79 average price target suggests a potential growth of approximately 55% this year.