We recently published a list of the 11 Most Promising EV Battery Stocks According to Analysts. In this article, we are going to take a look at where Enovix Corporation (NASDAQ:ENVX) stands against the other promising EV battery stocks.
Despite the electric vehicle industry growing at a fast pace, some challenges remain. The major ones are range anxiety among consumers, slow battery charging time, and the availability of charging infrastructure. However, even with these challenges, the industry remains healthy and a lot of energy and resources are being contributed toward it.
The infrastructure market is expected to grow at a phenomenal pace as PwC expects the EV supply equipment (EVSE) market to grow from $7 billion to $100 billion by 2040, at a 15% compound annual growth rate.
For electric vehicle components, governments around the world are incentivizing EV production. For example, the U.S. Department of Energy (DOE) recently announced $1.7 billion in funding to transition 11 vulnerable auto manufacturing plants across eight states to EV production and related components. For more details, you can read 8 Best EV Stocks to Buy According to Short Sellers.
Advancements in EV Battery Technology
Due to the environmental impacts of internal combustion engines, scientists have also been working tirelessly to solve the current problems faced by EV batteries. Researchers, led by the University of Colorado Boulder, have uncovered the cause of battery degradation, a common issue that leads to reduced capacity over time. Their study, published in Science.org, may pave the way for improved lithium-ion batteries, which are crucial for EVs and energy storage.
Using advanced X-ray technology, they discovered that hydrogen molecules from the battery’s electrolyte bind to the cathode, taking spots meant for lithium ions, which weaken the battery’s performance. This new understanding could help engineers develop longer-lasting, cobalt-free batteries for EVs, which would increase driving range, reduce costs, and address environmental and ethical concerns related to cobalt mining.
Additionally, according to a research report published in Frontiers in Quantum Science and Technology, Yuji Hatano and his team explored the impact of transverse magnetic fields on diamond quantum sensors for EV battery monitoring. Their research aimed to improve measurement accuracy for temperature and magnetic fields, which are crucial for determining the state of charge (SOC).
The study showed that diamond sensors enhance SOC estimation, which could potentially increase the EV cruising range by 10%. A prototype demonstrated high precision with currents up to 1,000 amperes, and misalignment detection was highly accurate. The findings suggest diamond quantum sensors could significantly improve battery monitoring in EVs and other industries.
Moreover, solid-state batteries could also reduce the charging time in batteries which could drastically improve the consumer sentiment and increase the demand for EVs. It was suggested by Mark Fields, former Ford CEO and President on CNBC’s ‘Squawk Box’ and we discussed it in our article on the best EV stocks for the long term. Here is an excerpt from the article:
“Fields suggested that automakers need to offer more affordable EVs and expand hybrid offerings while working towards breakthroughs in battery technology, especially solid-state batteries. These batteries could eventually reduce charging times to match the convenience of filling up at a gas station…
…He emphasized that while automakers are working on delivering low-cost EVs, the real game-changer will be the development of solid-state batteries, which could significantly improve charging times and consumer convenience.”
Our Methodology
For this article, we identified over 20 EV battery stocks through screeners and ETFs. We narrowed our list to 11 stocks with the highest average analyst price target upside, as of September 12. We also added the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 hedge funds as of the second quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A close-up of a battery cell being assembled with intricate precision.
Enovix Corporation (NASDAQ:ENVX)
Average Analyst Price Target Upside as of September 12: 114.13%
Number of Hedge Fund Holders: 22
Enovix Corporation (NASDAQ:ENVX) is a California-based company that has made significant strides in the field of advanced battery technology with its unique 3D Silicon cell design. The breakthrough approach features a silicon anode that is entirely active, a major upgrade from conventional lithium-ion batteries.
As a result, the new batteries offer a remarkable boost in energy density and lifespan, which makes them highly attractive for applications demanding extended battery life and higher performance. Additionally, the stock has a consensus Strong Buy rating among 12 analysts, and its average price target of $20.00 represents an upside of 114.13% from current levels, as of September 12.
Enovix (NASDAQ:ENVX) was part of 22 funds’ portfolios and the total stake value was $153.245 million in the second quarter. As of June 30, Electron Capital Partners is the largest shareholder in the company and has a position worth $89.7 million.
In July 2022, Enovix (NASDAQ:ENVX) took a major step forward by delivering its first battery packs. The packs incorporate their high-energy silicon anode cells along with sophisticated electronic control systems.
The development means that the company is now able to offer battery solutions that provide enhanced power for devices that consume more energy. The shift from single-cell offerings to full battery packs opens up new opportunities in various consumer electronics and other energy-intensive applications.
In the second quarter, the company reported a non-GAAP EPS of -$0.14, which beat expectations by $0.09. The company also achieved revenues of $3.8 million, which exceeded forecasts by $0.15 million. The revenues showed a significant increase from the $42,000 reported in the same quarter of the previous year.
The company has a robust financial position that supports its ongoing projects and growth as it ended the quarter with around $250 million in cash and equivalents. For the third quarter, the company has projected revenues between $3.5 to $4.5 million, which shows continued progress and expansion in its market presence. It ranks 4th on our list of the most promising EV battery stocks according to analysts.
Massif Capital Real Assets Strategy stated the following regarding Enovix Corporation (NASDAQ:ENVX) in its Q2 2024 investor letter:
“Enovix Corporation (NASDAQ:ENVX): Enovix is perhaps a bit of an outlier in our portfolio given that it is a battery manufacturer selling into consumer goods markets, but it fits nicely in what we believe to be the Massif Capital analytical sweet spot, businesses where science/technology, geopolitics/geoeconomics and energy/materials overlap. While some would argue that Enovix is inappropriate for a liquid real asset portfolio, the traditional definition of real asset businesses is dated.
Traditionally, real asset businesses are those that own and operate real estate, infrastructure, and natural resource assets. While this definition is workable, and most of the companies we invest in fall into one of these categories, it does not consider the ever-growing role of applied physical sciences in specific manufacturing fields, nor does it take into account the growing importance of material sciences and the changing nature of energy in general. Enovix is a material sciences business aiming to transform an ever-growing list of unique, highly refined materials into energy storage devices. They create value by understanding materials’ physical and electrochemical properties better than others…” (Click here to read the full text)
Overall ENVX ranks 4th on our list of the most promising EV battery stocks. While we acknowledge the potential of ENVX as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ENVX, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.