The renewable energy sector has gained much steam over the past years, fueled by policy support and net-zero emission targets by several governments worldwide. The International Energy Agency (IEA) has stated that the renewable energy sector is one of the fastest-growing sectors, with 290 GW of new generation capacity installed this year worldwide, marking a record-breaking year.

In addition, IEA predicts the growth of renewable energy will accelerate over the next five years, driven by commitments made by world leaders. As of October 2021, governments have approved spending $480 billion on clean energy and $45 billion on renewables.

Furthermore, the global lithium-ion recycling battery market is expected to grow by $1.11 billion, at a CAGR of 17.8% over the 2021 – 2025 period. So, we think battery recycling stocks Umicore SA (UMICY), Li-Cycle Holdings Corp. (LICY), and American Battery Technology Company (ABML) might be ideal additions to one’s renewable energy portfolio.

Umicore SA (UMICY)

UMICY is a materials technology and recycling company that operates globally. The Brussels, Belgium-based company functions through the broad segments of Catalysis; Energy & Surface Technologies; and Recycling.

On December 8, UMICY and Volkswagen AG (VWAGY) announced plans for a joint venture to increase cathode material production capacities to  VWAGY’s European battery-cell production. The venture is expected to leverage extensive technological synergies and give the companies a first-mover advantage in the market.

For its fiscal first half of 2021, UMICY’s revenues (excluding metal) increased 37.5% year-over-year to €2.15 billion ($2.42 billion). Its profit and EPS from continuing operations came in at €405.30 million ($456.68 million) and €1.65, respectively, registering an improvement of 338.6% and 334.2% from the same period last year.

Analysts expect UMICY’s revenue to increase 15.8% year-over-year to $4.55 billion in the current year (fiscal 2021).

The stock has declined 1% in price intra-day to close yesterday’s trading session at $9.81.

Li-Cycle Holdings Corp. (LICY)

LICY operates as a lithium-ion battery resource recovery and recycling business company. Based in Mississauga, Ontario, Canada, the company’s offerings include a mix of cathode and anode battery materials, like lithium, nickel, and cobalt. The company went public in a business combination with Peridot Acquisition Corp. on August 11, 2021.

On December 14, LICY announced that it would construct its commercial Hub facility in the Eastman Business Park near Rochester, New York. The facility is expected to position LICY to capitalize on the growing demand for lithium-ion battery recycling.

Also in December, LICY declared that it has entered into a manufacturing scrap supply and nickel sulphate off-take agreement with LG Chem, Ltd. (LGC) and LG Energy Solution, Ltd. (LGES). Regarding the agreement, Ajay Kochhar, co-founder and Chief Executive Officer of LICY, said, “This proposed commercial arrangement with LGES and LGC and related strategic investment further enhance our global growth strategy as we continue to scale our safe, efficient, and sustainable lithium-ion recycling technologies.”

LICY’s revenues increased 840.5% year-over-year to $1.71 million in its fiscal third quarter. ended July 31. This can be attributed to a  1,388.8% increase from the prior-year quarter in product sales to $1.59 million. Its cash from financing activities improved by 2,132.9% from the same period last year to $6.57 million.

The consensus EPS estimate for the next year (fiscal 2022) indicates a 94% year-over-year increase. Likewise, the $53.44 million consensus revenue estimate for the coming year reflects a rise of 576.5% from the current year.

LICY’s shares have declined 5.5% in price intraday to close yesterday’s trading session at $9.45.

American Battery Technology Company (ABML)

ABML explores, mines, extracts, and recycles battery metals. The Incline Village, Nev.-based company has operations in the Western Nevada Basin. It has also built a clean technology platform that increases the production of primary metals used in the batteries of electric cars, consumer electronics, and power tools.

On December 10, ABML announced that it had received permit approval and reclamation bonding from the BLM Nevada State Office in Reno for initial Phase One subsurface sampling of its 305 lode mining claims in Little Smoke Valley, Nevada. With the permit and bonding in place, exploratory drilling is expected to commence soon.

On November 11, the company reported progress in the construction of its pre-commercial battery facility at Fernley, Nevada, and its receipt  of a Core and Shell Building permit. This is expected to pave the way for the construction of production buildings, laboratories, and office spaces. So, the facility should garner significant revenues for the company eventually.

For the three months ended September 30, ABML’s net cash provided by financing activities increased 2,584.9% year-over-year to $41.25 million. The company’s cash balance rose 3,452.2% from the same period last year to $45.91 million.

The Street expects ABML’s EPS to increase 25% year-over-year in the current year (fiscal 2022).

The stock has gained 114.7% in price over the past year to close yesterday’s trading session at $1.02. It has gained 1% over the past five days.

UMICY shares were trading at $9.97 per share on Tuesday afternoon, up $0.16 (+1.63%). Year-to-date, UMICY has declined -16.22%, versus a 24.89% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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