A proven strategy to deliver outsized gains over time is to invest in companies that are part of rapidly expanding addressable markets. Canadian investors with a sizeable risk appetite should consider allocating a portion of their capital to growth stocks such as Electrovaya (TSX:ELVA).
With a market cap of $151.5 million, Electrovaya stock is down 20% from its 52-week high. It is engaged in the design, development, manufacture, and sale of lithium-ion batteries, battery management systems, and battery-related products for energy storage and clean energy transportation. Electrovaya also operates infinity battery cell technology and solid-state battery technology.
The bull case for the TSX stock
Electrovaya has positioned itself as a leading North American lithium-ion battery manufacturer specializing in safety and longevity for mission-critical applications. Based on its investor presentation, the company has reached a profitability inflection point, achieving seven consecutive quarters of positive EBITDA (earnings before interest, tax, depreciation, and amortization).
Electrovaya’s proprietary Infinity technology features ceramic separator technology with +30 patents. It delivers batteries that offer four times the life of typical lithium-ion batteries and superior safety performance.
This technology has been deployed in over 28,000 battery systems, powering more than 200 warehouses and logistics centres. Electrovaya has attracted 14 Fortune 100 clients and established strategic partnerships with major OEMs (original equipment manufacturers), including Toyota Material Handling and Sumitomo.
With manufacturing facilities in Mississauga, Ontario, and a 137,000-square-foot gigafactory being developed in Jamestown, New York (supported by a $50.8 million EXIM Bank loan), Electrovaya is strengthening its domestic manufacturing capabilities. The U.S. facility will benefit from IRA tax credits of $10-15 million annually.
Electrovaya has identified a $113.5 billion addressable market spanning material handling equipment ($33.3 billion), electric commercial vehicles ($70.9 billion), stationary energy storage ($7.8 billion), and defence applications ($1.5 billion). Beyond its current focus on material handling, Electrovaya is expanding into new verticals, including mining, construction, defence, and energy storage systems.
With trailing 12-month revenue of $43.7 million and gross margins improving to 30.6% in fiscal 2024 (ended in September), Electrovaya is positioning itself to become one of North America’s few profitable battery companies.
Is this clean energy stock a good buy?
Electrovaya reported solid fiscal first-quarter (Q1) results with revenue of $11.2 million, gross margins of 30.5%, and its seventh consecutive quarter of positive adjusted EBITDA of $0.6 million.
It continues to see strong momentum from its material handling OEM partners, with a recently introduced leasing program showing high sales interest. Electrovaya’s customer base is also expanding, with plans to ship its first modules to a global construction OEM in Japan later this quarter.
Electrovaya’s solid-state battery development continues to progress on the technology front, with pouch cells now cycling consistently to over 200 cycles. Electrovaya reiterated its 2025 revenue guidance, with sequential quarterly growth expected throughout the year.
Analysts tracking the TSX stock expect sales to increase from $44.6 million in fiscal 2024 to $254 million in fiscal 2029, indicating a compounded annual growth rate of over 41%. The battery manufacturer is forecast to report adjusted earnings per share of $0.88 in fiscal 2029, compared to a loss per share of $0.04 in 2024.
If ELVA stock is priced at 15 times forward earnings, it will trade at $13.2 per share, indicating an upside potential of 250% from current levels. So, an investment of $500 in ELVA stock in May 2025 could be worth close to $1,850 in 2028.
