We recently published a list of 13 Most Promising EV Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Albemarle Corporation (NYSE:ALB) stands against the other most promising EV stocks to buy according to hedge funds along with the industry outlook.
According to a September 13 report by S&P Global, the auto industry’s shift to electric vehicles (EVs) is accelerating, with 2026 seen as a pivotal year for adoption. By 2030, over 25% of new passenger cars sold are expected to be electric, as the transition away from internal combustion engines (ICE) gains momentum.
Major automakers are projected to produce over 70% of global EVs by 2030, up from just 10% in 2022. However, a few challenges remain, like range anxiety, especially for those without convenient charging options. Addressing these issues will require collaboration among automotive, utilities, government, and property owners, which could create a way for significant growth in vehicle electrification and potentially end the ICE era.
We discussed the market dynamics of the EV industry in our article, 11 Small Cap EV Stocks to Invest In. Here is an excerpt from the article:
“While the growth in the US and Europe is slowing down, China is picking up a significant pace and dominating the EV landscape. According to a World Economic Forum report, Chinese EVs are much cheaper than their Western counterparts, with an average price of $34,400, compared to $55,242 in the U.S. The price gap is driven by lower labor costs, favorable government subsidies, and more affordable battery sourcing.
The Electric Vehicle Shift and Its Economic Impact on Europe
While Europe saw significant adoption of EVs in the earlier years, it has seen a slowdown. According to an October 3 report by McKinsey, the growth of EVs in Europe poses both opportunities and challenges for the automotive industry, which currently contributes $1.9 trillion to the economy.
While electric mobility could add up to $300 billion in gross value added (GVA) by 2035, the industry could risk losing $400 billion if European OEMs’ global market share declines from 60% to 45%.
Key strategies for success include expanding the domestic battery supply chain, improving manufacturing capabilities, streamlining regulations, and investing in R&D and talent development. By proactively addressing these challenges, European OEMs can capitalize on the EV shift, generate new value, and secure the region’s economic future in the automotive sector.
Shifting Gears to the Inevitable Future of Electric Vehicles
In a CNBC interview, Young Liu, Chairman of Hon Hai Technology Group said that the future of the automotive industry will be dominated by electric vehicles, with hybrids playing a limited role due to advancements in battery technology. He made a note of current challenges such as charging times and range anxiety, but expects improvements in battery systems will eliminate the need for hybrids.
Liu outlined a path to profitability for EV companies based on three key strategies: “platformization, modularization, and standardization”. He believes these will help streamline operations and reduce the need for individual investments in proprietary platforms, which is a challenge for traditional manufacturers due to their existing structures.
Our Methodology
For this article, we used stock screeners and ETFs to identify over 40 companies with significant operations related to the EV industry. Next, we narrowed our list to 13 stocks most widely held by institutional investors. The most promising EV stocks are listed in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s Q2 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).
A team of scientists in a laboratory observing the sophisticated engineering of specialty chemicals.
Albemarle Corporation (NYSE:ALB) is an American specialty chemicals manufacturer that operates through three main segments which include lithium, bromine specialties, and catalysts. It has established itself as a significant player in the global lithium market, especially for EV batteries, while also leading advancements in flame retardant technologies and catalysts used in petroleum refining.
It serves a diverse range of sectors, including energy, automotive, electronics, and pharmaceuticals. The company provides lithium carbonate and lithium hydroxide products for several cathode applications, alongside tailored pre-lithiation solutions that advance energy storage when combined with silicon anodes.
The company also offers ultra-thin lithium metal anodes for improved energy density and lithium sulfide for solid-state electrolytes, boosting conductivity and safety. Additionally, the company supplies flame-retardant solutions for battery enclosures that ensure safety and durability. Its commitment to developing recycled lithium options supports a sustainable supply chain for the future of clean energy.
According to the company, Albemarle (NYSE:ALB) faces a mix of opportunities and challenges in the global market, especially within lithium battery and energy storage sectors crucial for EVs. The company expects a decline in net sales and profitability in 2024 if lithium prices remain low, although increased production capacity may help offset this.
In the Specialties segment, reduced demand in some areas may lead to lower sales, but a strong performance in pharmaceuticals and agriculture could balance this. The Ketjen business is expected to grow due to lower input costs and rising demand for hydroprocessing catalysts.
Moreover, the company is focused on cash generation, cost management, and optimizing growth investments while remaining open to acquisition opportunities that align with its strategic goal.
The evidence of cost management can be seen in the second quarter as Albemarle (NYSE:ALB) announced reductions in capital spending at its Kemerton site, aiming to save $200-300 million. Moreover, the company is reducing its 2024 capital expenditure by $300-400 million compared to 2023 levels.
With 32 out of 912 hedge funds bullish on the company stock in Q2, the company makes it to the 8th spot on our list of most promising EV stocks.
Overall ALB ranks 8th on our list of most promising EV stocks to buy according to hedge funds. While we acknowledge the potential of ALB 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 ALB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
