The battery market has been one of the most dynamic over the last several years. Secular tailwinds guiding this market’s rise are the proliferation of consumer electronics products as well as the adoption of electric vehicles (EVs). While the former trend has been in the making for decades now, the latter is a quite recent phenomenon. Broad government support for the promotion of clean energy products and shifting consumer preferences has led to the steady rise of electric vehicles.
However, trouble in the global macro economy has begun to stifle the EV sector broadly. High inflation, which impacts the costs of key EV parts, coupled with elevated global interest rates has sorely impacted the demand for new electric vehicles. In turn, the price for lithium carbonate, the rare earth mineral essential for developing lithium-ion batteries, has plummeted more than 44% over the past 12 months due to oversupply in the market and weak demand from end markets.
These short-term headwinds should not cause investors to overlook the future prospects of the battery market. Wall Street certainly hasn’t. Below are 3 battery stocks to buy with “strong buy” ratings from Wall Street firms.
BYD (BYDDY)
The Chinese electric vehicle behemoth BYD (OTCMKTS:BYDDY) has, in and of itself, been a phenomenon over the past couple of years. Despite economic turmoil in the world’s second-largest economy, brought upon by an ever-ailing real estate crisis, the EV manufacturer has been a bright spot. At the end of last year, BYD delivered more electric vehicles than chief competitor Tesla (NASDAQ:TSLA), morphing the company into the largest EV manufacturer during that time. First quarter deliveries in 2024 also held up against analyst expectations.
What people don’t have often know about BYD is that the global firm started out as a developer of batteries for consumer electronics products. In spite of a major shift, BYD is still a major player in the battery market. Last year, BYD generated 111.4 GWh of power batteries, which was up 58% from 2022. The company carved out 15.8% of the global market share for itself, making it the second-largest battery provider on the planet.
According to Koyfin, BYD has an overwhelming “Strong Buy” rating from Wall Street analysts. While struggling with EV market headwinds and intense competition in China, BYD’s stock has certainly taken a hit, but the long-term prospects remain intact.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) doesn’t make batteries per se, but the firm does play an essential role in mining the lithium carbonate needed to develop lithium-ion batteries. The miner is spin-off from a larger organization. Before October 2023, Lithium Americas consisted of both Argentina and United States-based lithium mining assets. However, since then, the company split into two independent mining companies, Lithium Americas and Lithium Argentina (NYSE:LAAC), in order to better steam line the companies’ respective priorities.
Lithium Americas mines its lithium out of the Thacker Pass located in the state of Nevada. The construction of the mine had begun towards the end of the first quarter in 2023 and will have a life of at least 40 years. The Thacker Pass is the largest lithium deposit in the United States, and Lithium Americas’ exposure to it will solidify its role in providing lithium to EV manufacturers such as General Motors (NYSE:GM).
LAC has received two “Strong Buy” ratings from Wall Street firms and “Buy” ratings from 6 other firms.
Ganfeng Lithium Group (GNENF)
The final entry on this list is another China-based firm. Ganfeng Lithium Group (OTCMKTS:GNENF) has been able to grow into the largest lithium miner in China and one of the largest in the world. The miner not only participates in getting the lithium out of the ground, but it is also involved in refining, processing, battery manufacturing as well as recycling. Ganfeng’s lithium operations span beyond China to Australia, Argentina, Mexico, Mali, and Ireland.
I find the miner’s mining project in Argentina to be most intriguing. Ganfeng owns a significant stake in the Cauchari-Olaroz salt-lake project, which is one the largest salt-lake lithium extraction projects globally. The lithium resources in this region amount to 24.58 million tons of lithium carbonate. The mine has officially been put into operation since 2023, and phase 1 of the project has an earmarked production of around 40,000 tons of lithium carbonate.
Of course, like many lithium miners, Ganfeng has struggled with compressing revenue growth and dwindling profits due to oversupply in the lithium market and waning demand. Lithium prices have experienced a sort of revival since the beginning of 2024. Short-term headwinds in the market should not cause investors to gloss over Ganfeng’s long-term opportunities. GNENF has averaged a “Buy” rating from 30 Wall Street firms. Six have rated it as a “Strong Buy.”
On the date of publication, Tyrik Torres did not have (either directly or indirectly) 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.
