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EV Stocks vs. Battery Metal: Which Green Investment Should You Choose?

consider the options
Image source: Getty Images

Written by Adam Othman at The Motley Fool Canada

The S&P/TSX Composite Index has been on a rollercoaster this year. After several ups and downs, the Canadian benchmark index is up by 4.56% year to date at the time of this writing. More notably, the last few days of trading saw a few consecutive winning days for the market, with tech, energy, and metals mining sectors providing the boost.

As the focus on going green increases, publicly traded companies across various industrial spaces stand to benefit, growing shareholder value. Investing in electric vehicle (EV) stocks and battery metal stocks can offer investors good exposure to greener spaces. Today, I want to explore whether betting on EV stocks or battery metals stocks presents the potential for better investment returns.

To this end, I will discuss one top stock from each space to paint a clearer picture.

Lion Electric

Lion Electric (TSX:LEV) is a $559.76 million market capitalization vehicle manufacturer, primarily focusing on the production of electric school buses, trucks, and other commercial vehicles. With little competition in the EV space in Canada, its focus on commercial EVs gives it a niche it can enjoy without competing against industry giants.

Besides a niche focus, it differs from other EV manufacturers in how it generates revenue. Where most companies sell directly to consumers, Lion Electric stock relies on recurring revenue from large corporations and governments.

That said, it is not a profitable company right now. As a small name, the venture capital stock is a riskier-than-average stock. As of this writing, it trades for $2.97 per share, down by 45% from its 52-week high. Despite its small presence, this EV stock can deliver stellar long-term returns as the broader industry grows.

American Lithium

American Lithium (TSXV:LI) is a metals and mining company primarily engaged in the exploration stage. The Canada-based company focuses on acquiring, exploring, and developing lithium deposits.

Lithium is the key ingredient for making batteries that power everything from EVs to smartphones and other portable devices that are an integral part of our lives. A small name in the mining industry, it has a $450.78 million market capitalization.

American Lithium stock is not the biggest Canadian lithium stock, but it’s worth watching closely. The company announced in July that it is making progress with its work in Macasuni, and the company’s chief executive officer Simon Clarke has said that American Lithium will launch several pilot operations soon.

Its focus on large-scale lithium projects in mining-friendly jurisdictions puts it in an excellent position to deliver stellar growth amid the rising popularity of the metal.

Foolish takeaway

Due to the growing popularity of going green, EV stocks and battery metals stocks will likely continue increasing shareholder value in the coming years.

With EV stocks, the focus is more on one particular segment. Investing in a battery metals stock like American Lithium, however, offers exposure to the rare metal that allows the underlying company to benefit from more avenues than the automotive industry.

The post EV Stocks vs. Battery Metal: Which Green Investment Should You Choose? appeared first on The Motley Fool Canada.

Should You Invest $1,000 In The Lion Electric Company?

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Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023... and The Lion Electric Company wasn't on the list.

The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 8/16/23

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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2023