In every economy, the growth of one industry has a positive or negative impact on the other industries they are associated with. Similarly, the growth of the EV industry has led to a massive demand for batteries to run these EVs. Battery makers are trying to expand production to meet the rising demand and according to the International Energy Agency, the battery demand for vehicles increased by 65% in 2022 in the U.S.
Further, as per a report from McKinsey & Company, the demand for lithium-ion batteries will grow by over 30% annually by 2030. It is expected to reach a value of over $400 billion and if you want to make the most of the transition to electric, invest in battery stocks.
Due to a regulatory shift towards sustainability and the higher adoption rates and demand for greener energy, the demand for batteries will be on the rise. Some of the biggest economies are seeing a massive rise in the demand for batteries. The outlook for the battery industry is positive and you can enjoy an early-mover advantage by investing in battery stocks. With that in mind, let’s take a look at the three battery stocks to buy to turn your $1,000 into $1 million.
Battery Stocks: BYD Co. (BYDDY)
One of my favorite battery stocks and also one of the million maker stocks is BYD Co. (OTCMKTS:BYDDF). The Chinese company isn’t a pure-play battery maker but it is the second-largest battery maker currently. It has delivered the highest number of EVs and is a strong competitor to Tesla (NASDAQ:TSLA). BYD is one name that is always on the radar for investors looking for long-term stocks. BYDFF stock is exchanging hands for $34 today and is up 34% year to date.
The company is a leader in the manufacture of rechargeable batteries which include lithium-ion batteries. With the growing adoption of EVs across the world, the demand for batteries will soar and this is when the company will benefit. To meet the growing demand, the company is planning to increase the production of Blade batteries and has invested $1.2 million in the plant. When it comes to batteries, this might only be the beginning because the world is now ready for a transition to electric and this could mean a huge demand for batteries.
That said, the company has strong financials and has sold 996, 476 cars in the first five months of 2023. It saw a whopping 411% jump in profits for the first quarter year over year. BYD entered Australia and France in the past month and is steadily expanding its global presence across different markets like Europe, Japan, and Latin America. It also introduced the Fang Cheng Bao which is an EV brand that will have off-road and SUVs. The company could be one of the largest battery manufacturers in the next few years due to the increasing EV adoption. Compared to Tesla, the stock looks much cheaper which means you can take home big gains.
Lithium Americas (LAC)
Another top battery stock to buy, Lithium Americas (NYSE:LAC) has several business developments that will generate revenue in the coming years. The stock has moved sideways in the past few months but there is a high chance of it moving upside. LAC stock is trading at $20 today and is down close to 1.85% in the past year. On the other hand, it is up 15% year to date and once the production commences, the stock won’t be this cheap. This is one of the high-return stocks to own.
A strong reason behind the upside potential is the company’s move to create two different entities. While Lithium Americas will focus on North America, another entity, Lithium Argentina will focus on its assets in Argentina. This decision will allow the company to make the most of its assets in both countries. That said, the company is already working on the Thacker Pass project and it has the potential to unlock after-tax net present value of $5.7 billion. As soon as production begins, we will see a solid cash flow.
Lastly, General Motors (NYSE:GM) has an agreement with Lithium Americas and will invest $650 million in the Thacker Pass project. With automakers planning to electrify their fleet in the coming years, there will be millions of EVs being sold and it could lead to a boost in lithium stocks. While the company doesn’t generate any revenue right now, it is working on building extraction sites and has invested heavily in them. With LAC stock, the upside potential is massive but you will need patience to make the most of it.
Livent Corporation (LTHM)
Livent Corporation (NYSE:LTHM) is a company that specializes in the production and supply of lithium-based products that are suitable for companies looking for sustainable energy solutions. The company uses lithium to fill the lithium manufacturing and refining facilities across China, England, Argentina, and North America which is used to supply the EV makers. With the rise in the demand for EVs, the demand for lithium will also rise.
The merger between Livent Corporation and Allkem will make the business highly profitable. The combined net income of both companies will be $640 million and the combined revenue will be $1.7 billion. If we just look at the financials of Livent, it reported an adjusted EPS of $0.60 for the first quarter and beat analyst expectations. It also saw a 76% year-over-year growth in revenue which hit $253.5 million.
As an individual entity, Livent has already achieved significant success and demonstrated strong sales performance. But with the merger, it will become even stronger and achieve new highs. LTHM stock is trading at $28 right now and is up 49% year to date. The stock has generated close to 74% returns in the past five years. The world needs more batteries and Livent is here to make the most of it. It has substantial upside potential from the current level.
On the date of publication, Vandita Jadeja did not hold (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.
