We recently published a list of the 8 Best EV Battery Stocks To Buy in Late 2024. In this article, we are going to take a look at where Sigma Lithium Corporation (NASDAQ:SGML) stands against other best EV battery stocks to buy in late 2024.
Future of Lithium with M&A Activity and Regional Consolidation Trends
While lithium was down for a long time due to oversupply this year, it seems like the market is gaining back some interest in the metal as can be seen in recent M&A activity. The Australian mining giant Rio decided to acquire Arcadium for a healthy premium showing confidence in the future of the lithium market.
Romano Sala Tenna of Katana Asset Management discussed this in a CNBC interview and he sees continued growth opportunities in the Australian M&A market. It is driven by two key factors: it remains cheaper to acquire existing assets than to build new ones, and regulatory hurdles for new projects are increasing, causing delays.
On the global hunt for lithium, Sala Tenna discussed the competition, especially between China and other countries. He explained that China dominates the upstream processing of lithium, controlling the production of both spodumene and brine.
More importantly, China leads in the downstream processing, producing lithium chemicals for batteries, due to its technological edge and economies of scale. He sees Japan and South Korea trying to challenge China’s position but believes China will maintain its dominance.
Finally, Sala Tenna mentioned that more mergers and acquisitions are expected in important lithium-producing areas like Western Australia and South America, as these regions lead in global lithium production.
READ ALSO: 8 Best EV Penny Stocks to Invest in Now and 7 Best Auto Components and Parts Stocks to Buy Right Now.
Innovations in Battery Technology
While lithium batteries with graphite anodes seem to be the most widely used and known ones, innovations are happening to expand the battery industry in the EV market. According to a Markets and Markets report, The Future of Silicon Battery Industry: Innovations and Market Outlook, the silicon battery market is projected to grow significantly, increasing from $55 million in 2023 to $414 million by 2028, with a compound annual growth rate (CAGR) of 49.5%.
The growth is fueled by the adoption of next-generation lithium-ion batteries that use silicon anodes, which offer greater energy storage capacity and longer battery life. Geographically, North America, Europe, and Asia-Pacific are expected to lead the silicon battery market, supported by government policies, advancements in energy storage technology, and the rise of electric mobility.
Additionally, solid-state batteries have the potential to shorten charging times significantly, which could greatly improve consumer satisfaction and boost the demand for EVs. We mentioned this in our article about the best EV stocks for the long term, where we discussed CNBC’s conversation with Mark Fields. 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 used ETFs and screeners to identify nearly 30 EV battery stocks and narrowed our list to 8 stocks most widely held by institutional investors. The best EV battery stocks to buy in late 2024 are listed in ascending order of their hedge fund sentiment, which was taken from Insider Monkey’s database of 912 hedge funds.
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).
Sigma Lithium Corporation (NASDAQ:SGML)
Number of Hedge Fund Holders: 20
Sigma Lithium Corporation (NASDAQ:SGML) is a key player in the global EV battery market that focuses on lithium exploration and development in Brazil, especially for the EV sector. The company owns several properties in Minas Gerais, including Grota do Cirilo, Genipapo, Santa Clara, and São José, covering 185 square kilometers.
It received additional funding from Brazil’s Development Bank (BNDES) in August to expand production at Grota do Cirilo and secured a development loan of BRL 487 million (1 BRL = US$0.18) to fund its second Greentech Carbon Neutral Plant.
Sigma Lithium (NASDAQ:SGML) hosted its 2024 Investor Day on September 24 and highlighted a significant milestone in its production ramp-up. The company outlined plans to increase its industrial capacity to 125,000 tonnes per year of lithium carbonate equivalent (LCE) by 2026. The growth will come from two new production lines at the Greentech Plant, increasing capacity by 34,000 tonnes LCE by 2025 and 54,000 tonnes LCE by 2026.
Its strategy leverages economies of scale, subsidized financing, and a commitment to carbon neutrality. Recent investments aim to boost production by more than 10%, including monetizing stockpiled ore and implementing pre-screening steps to improve yields. The company projects an adjusted cash EBITDA of $420 million by 2025 and $700 million by 2027. This expansion is supported by the BNDES funding.
On September 16, Sigma Lithium (NASDAQ:SGML) shipped its 12th vessel of Quintuple Zero Green Lithium, which was its second sale to Mitsubishi, a major Japanese conglomerate that manufactures cars among other things. On October 23, the company announced its first shipment of 22,000 tonnes of Quintuple Zero Green Lithium to Abu Dhabi’s International Resources Holding (IRH).
The transaction reflects the company’s strategy to partner with entities that have strong financial backing. The price is provisionally set at 8.25% of battery-grade lithium carbonate’s market price at the shipment date.
In the third quarter, the company produced 60,237 tonnes of Quintuple Zero Green Lithium, surpassing its 60,000-tonne target and increasing production by 22% from the second quarter. The achievement is attributed to the efficiency of dense medium separation technology used at Sigma’s (NASDAQ:SGML) Grota do Cirilo operations.
Overall, SGML ranks 6th on our list of best EV battery stocks to buy in late 2024. While we acknowledge the potential of SGML 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 SGML but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.