LI Results Show EV Stocks are Undervalued: Some Fresh Ideas (ALB, KULR, RIVN, TSLA, NIO, LCID, QS, FSR)

Chinese EV producer, Li Auto Inc (NASDAQ:LI), electrified the EV space on Tuesday after posting impressive growth that blew away analyst expectations. It was a report that impacts the narrative for the EV and lithium-ion battery stocks in important ways.

Most central to this plot twist is the fact that the company beat expectations and guided up for Q4 despite ongoing critical chip supply chain hiccups that are expected to extend well into next year.

The company’s triple-digit delivery and revenue growth speaks volumes. And the fact that it came in a context defined by inflationary headwinds makes this all the more impressive. Margins jumped to over 21%, which follows news that Tesla Inc. (Nasdaq:TSLA) saw margins jump by over 280 basis points to 30.5%. That could mean that other names in the EV space like LI have further margin upside even in the current context. Imagine what might be possible if supply chain issues resolve and inflationary pressure peels back over the next 2-3 quarters.

LI swung to a Non-GAAP operating profit of RMB 259.4 mln compared to a loss of RMB (45.0) mln loss in 3Q20 already. And it may be only upside from here. The upshot is the notion that EV names may be underrated by the market right now by too much concern over supply issues in the current context.

With that in mind, we take a look below at some of the more interesting stories in the EV and Lithium-Ion battery space.

Albemarle Corp. (NYSE:ALB) engages in developing, manufacturing, and marketing of chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, transportation, pharmaceuticals, crop production, food-safety, and custom chemistry services. It operates through Lithium, Bromine Specialties, and Catalysts segments. Given its global leading position in the lithium production space, ALB is well established as a core EV battery play. 

The company’s Lithium segment engages in developing and manufacture of basic lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and value-added lithium specialties and reagents. The Bromine Specialties segment consists of bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Catalysts segment contain two product lines: clean fuels technologies, which is primarily composed of hydro processing catalysts, and heavy oil upgrading that comprises of fluidized catalytic cracking catalysts and additives.

Albemarle Corp. (NYSE:ALB) recently announced its results for the third quarter ended September 30, 2021, including net sales of $830.6 million, an increase of 11%, a net loss of ($392.8) million, or ($3.36) per diluted share, and adjusted diluted EPS of $1.05, a decrease of 4%, excludes a $4.29 per share charge for a recent arbitration decision.

Even in light of this news, ALB has had a rough past week of trading action, with shares sinking something like -6% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way. Shares of the stock have powered higher over the past month, rallying roughly 4% in that time on strong overall action. 

Albemarle Corp. (NYSE:ALB) managed to rope in revenues totaling $830.6M in overall sales during the company’s prior quarterly financial data. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($595M against $1.6B, respectively).

KULR Technology Group Inc. (NYSE American:KULR) could be the most interesting name on the list right now because it is just starting to emerge and it doesn’t appear as though the crowd has really found it yet. The company develops, manufactures and licenses next-generation carbon fiber thermal management technologies for batteries and electronic systems. The company offers lithium-ion battery thermal runaway shields; fiber thermal interface materials; phase change material heatsinks; HYDRA TRS battery storage bags; internal short circuit device; and CRUX cathodes. 

The company is rooted in a 30-year history tied to carbon fiber thermal energy management technology for aerospace and defense applications. Its technology is trusted by NASA, with KULR parts on the Mars Rover 2020 Perseverance and the International Space Station.

KULR Technology Group Inc. (NYSE American:KULR) added to this strong narrative with its most recent announcement, out this week, that it has received an initial order totaling approximately $500,000 for its passive propagation resistant battery systems from the Lockheed Martin Corporation (NYSE:LMT). 

According to the release, this initial order is for immediate delivery and is the starting point in the partnership as LMT leverages KULR’s technological advancements in PPR energy products for its Advanced Energy Systems.

KULR’s PPR energy products include the Thermal Runaway Shield, the Internal Short Circuit, its full suite of proprietary battery design and testing methodologies, as well as the battery cell screening and monitoring system KULR developed for its aerospace and U.S. Department of Defense customers.

KULR Technology Group Inc. (NYSE American:KULR) CEO Michael Mo stated, “KULR’s heritage is hardware thermal energy management components incorporating our patented carbon fiber architecture. We are very pleased and honored to have Lockheed Martin Corporation as a partner advancing our integrated battery design, testing and management platform. As the industry leader serving DoD and aerospace customers, Lockheed Martin brings tremendous expertise and resources to help us perfect our solutions to serve the most mission critical applications in the world.”

Lucid Group Inc. (Nasdaq:LCID) Lucid Group, Inc. manufactures electric vehicles and has started to emerge as a top name in the space.

The company designs, develops, and built energy storage systems for electric vehicles and supplied automakers with the battery pack system needed to power hybrid, plug-in, and electric vehicles.

Lucid Group Inc. (Nasdaq:LCID) recently announced financial results for the third quarter ending September 30, 2021, including winning the 2022 MotorTrend Car of the Year, customer reservations rose to 13,000 in Q3, reflecting an order book of approximately $1.3B, and have since increased beyond 17,000, and customer vehicle production started in Q3 at Lucid’s Advanced Manufacturing Plant (“AMP-1”) in Casa Grande, Arizona, and the second phase of construction broke ground to add 2.85 million square feet of space.

Peter Rawlinson, CEO & CTO of Lucid, said, “We are tremendously excited by our accomplishments in our first quarter as a publicly traded company. We successfully began production of vehicles for customer deliveries, continued investing in capacity expansion of our manufacturing facility in Arizona, and opened new retail and service locations in advance of the Lucid Air launch. We were also pleased to receive independent validation by the EPA of our industry-leading range of over 500 miles for the Lucid Air. Our progress this quarter demonstrates our focus on execution, our cutting-edge technology, and our vision to help with solutions to address the climate challenges we all face. We look forward to ramping up production of our Grand Touring, Touring, and Pure models and expanding our footprint internationally.”

If you’re long this stock, then you’re liking how the stock has responded to the announcement. LCID shares have been moving higher over the past week overall, pushing about 4% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 45% in that time on strong overall action. 

Lucid Group Inc. (Nasdaq:LCID) has a strong balance sheet, with cash levels exceeding current liabilities ($4.8B against $269.4M).

Other key players in the EV space include Rivian Automotive Inc. (Nasdaq:RIVN), NIO Inc. ADR (NYSE:NIO), QuantumScape Corp. (NYSE:QS), and Fisker Inc. (NYSE:FSR).