Battery Recycling

Today, I want to focus on one of our recommendations that I really love, but that is underperforming at the moment: Li-Cycle (NYSE: LICY). Li-Cycle is a battery-recycling company that is building out an international infrastructure focused on the U.S. and Canada. We told you back in August that it would be part of the urban mining revolution.

Just think of how many things are about to need more batteries – cars, boats, busses, trucks, and more. With that massive growth forecasted, this company could be a huge winner:

That may be the future, but the past has not been kind of Li-Cycle shares, as we know:

Make no mistake, this is an ugly chart. And it is at odds with what I know the company is doing. The company’s value grew significantly in 2022, even as its shares fell.

That’s a trend that can’t continue.

Let’s dig into the company’s annual report and I’ll show you why I think the next 12 months–24 months are going to transform this company.

First, some background: In 2022, the company massively increased its ability to break down used lithium-ion batteries into “black mass.” The company uses a “hub and spoke” system, where the spokes break down the batteries, then the black mass gets shipped to the hub, where it is recycled.

Some highlights from the company’s 2022 report:

• Increased recycling capacity by three times
• Doubled black mass production 
• Exceeded its production target by 6%
• Expanded into Europe, with its first spoke in Germany
• Added partnerships with LG Chem, LG Energy Solutions, and Glencore 
• Grew revenues to $13.4 million, compared with $7.3 million in 2021
• Sitting on $578.3 million in cash right now (its current market value is $1 billion, so it is holding more than half its value in cash today)

Those are significant milestones. And each one increases the value of the company.

Looking forward to 2023, we see a massive increase in capacity – from 50,000 metric tons of used batteries to 80,000 metric tons this year.

The company is in a heavy growth phase, so we don’t expect it to turn a big profit. But it’s actively looking to secure loans to build more hubs and spokes. I’m convinced that, barring some disaster, this is going to be our best-performing stock over the next 12 months–24 months.

So, if you don’t own Li-Cycle yet, consider it.

Sincerely,

Matt Badiali