While oil and petroleum products are still the backbone of our energy economy, their prices are on the rise – in fact, high gasoline and diesel prices are major contributors to current high inflation rates and are partly responsible for the strong push for electric vehicles (EVs). ).
But the transition to electric vehicles does not end our dependence on energy. It will simply force us to trade one problem, dependence on oil, for another, dependence on lithium batteries. In this case, as Elon Musk said, “lithium batteries are the new oil.”
Canaccord analyst George Gianarikas seems to agree with Musk, noting: “We see many parallels between the communications revolution of the late 1990s and early 2000s and today’s energy systems revolution. new battery technologies, like today’s wild cats, are highly profitable endeavors, but not without risk.”
Gyanarikas does not give us a macro view of the industry. The analyst continues to drill down to the micro level and picks two lithium battery stocks he sees as potential winners in this expanding area.
In fact, Gianarikas is not the only one praising these actions. According to the TipRanks platform, each has a “Decisive Buy” consensus rating from the broader analyst community and offers significant upside potential, in the order of 100% or more. Let’s take a closer look.
Enovix Corporation (ENVKS)
The first lithium battery we’ll look at is Enovix Corporation, a manufacturer focused on next-generation battery technology. Due to the high power requirements of electric vehicles and the demands that vehicles will have on power and charging capacities, the company is creating new technologies to meet these challenges. Enovix is working with a combination of silicon anodes, 3D architecture and swelling protection limitations to develop a higher energy density battery for high performance applications from smartphones and other mobile computing devices to consumer electric vehicles.
Enovix works with a proprietary 3D battery cell architecture designed to increase the energy density of each battery. The technology is based on the use of silicon anodes, which can potentially double battery capacity compared to existing graphite-based anode technology. The high energy density of the Enovix battery design influenced the company’s development as it faced challenges of architectural limitations, charge efficiency, cycle time and lifespan.
Enovix is a very speculative stock as the company has not yet entered regular production. In the last reporting quarter, Q3 2022, the company produced batteries, but these were non-revenue-generating samples and not regular sales.
The speculative nature of the stock and its remoteness from real income did not stop Canaccord’s Gianarikas from recommending the stock.
“Enovix is bringing an innovative architecture to battery development and manufacturing that has the potential to revolutionize the sector. The company has also accumulated a strong sales funnel, the endorsement of major industry players (like Samsung) and experienced management… now the company must prove that it can produce its items on a large scale and at a profit. We are confident that this is possible and that this process will lead to a high return on equity for shareholders,” said Gianarikas.
Looking to the future from this vantage point, Gianarikas recommends a buy with a $20 target price, implying a solid 133% annual upside potential. (To view Gyanarikas’ track record, click here)
This speculative small cap battery developer has received 8 recent analyst reviews, all positive, giving the stock a unanimous Strong Buy analyst consensus rating. The average price target of $20.64 is in line with Canaccord’s view and suggests upside potential of 141% over the next 12 months. (See ENVX stock forecast)
Dragonfly Energy Holdings (DFLI)
The next company we’ll look at is focused on tackling the renewable energy disruption. The main sources of renewable energy, wind and sun, suffer from an obvious problem: the wind can die down and the sun can set or hide. It’s no secret that wind and solar renewable energy require an energy storage system to solve the intermittency problem. Dragonfly Energy Holdings is working on this issue.
The company is approaching this in a logical way with advanced battery technology for smarter and more efficient energy storage. Dragonfly’s storage technology is based on a proprietary solid state battery cell design. Last December, Dragonfly announced a major step forward in solid-state battery cell manufacturing when it announced that it had received a new patent from the US Patent and Trademark Office. The grant, a patent for “electrochemical cell dry-coat powder coating systems and methods,” helps protect Dragonfly’s intellectual property and thus clear the way for mass production.
While working on ramping up production and regular sales, Dragonfly is also preparing a line of products. The company has 10 battery models ready for production, as well as an advanced alternator. The battery line adopts a deep cycle lithium-ion design and features batteries suitable for 12V, 24V and 48V systems where they can replace traditional and highly toxic lead acid batteries.
Dragonfly, like Enovix above, is a speculative stock. It is also a completely new phenomenon to the public markets as it only entered the NASDAQ index last October after the completion of the SPAC deal. The business combination with Chardan NexTech Acquisition 2 Corporation resulted in Dragonfly’s gross revenue of $250 million and the ticker DFLI went public on October 10.
Right in the bull camp, Canaccord’s Gianarikas rates Dragonfly stock as “outperform” (i.e. “buy”), with its $15 price target implying a solid upside potential of 116% over the next 12 months.
Establishing his bullish stance, Gianarikas writes, “Dragonfly has created a solid niche by bringing traditional lead-acid markets into the lithium-ion era with its premium offerings. We expect the company to continue to gain momentum in the RV segment and expand into additional markets, including maritime, to drive growth. In the long term, Dragonfly’s solid state drive efforts will expand equity as the company looks to grow into a vertically integrated leader in energy storage markets. Dragonfly must now prove that it can maintain its premium pricing, break into new verticals, and bring its solid offering to life.”
Overall, while there are only 3 recent analyst reviews for this new battery company, they are all positive and the stock boasts a “Strong Buy” unanimous analyst consensus rating. Dragonfly shares are trading at $6.93, with an average price target of $14 indicating a 102% upside potential in the coming year. (See Dragonfly stock forecast)
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Denial of responsibility: The opinions expressed in this article are solely those of selected analysts. The content is for informational purposes only. It is very important to do your own analysis before making any investment.