Most Canadians should gain exposure to the equity market by investing in diversified low-cost exchange-traded funds. This strategy allows the average retail investor to generate inflation-beating returns and create long-term wealth. However, those with a sizeable risk appetite may consider investing in quality growth stocks that are part of rapidly expanding addressable markets.
Electrovaya (TSX:ELVA) is one such TSX stock that can help you turn a $1,000 investment into $10,000 over the next 10 years. Let’s see why.
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Is this Canadian stock a good buy?
Valued at a market cap of $414 million, Electrovaya is a TSX tech stock that has already surged 215% over the last 12 months. Electrovaya is engaged in the design, development, manufacture, and sale of lithium-ion batteries, battery management systems, and battery-related products for energy storage, clean electric transportation, and other specialized applications in North America. The company operates infinity battery cells technology, comprising low and high voltage systems, in addition to solid state battery technology.
Electrovaya presents a compelling turnaround story in the lithium-ion battery sector, having achieved a critical inflection point with nine consecutive quarters of positive adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) and two consecutive quarters of positive earnings per share.
The company’s trailing 12-month revenue of US$55 million has surpassed its US$50 million breakeven threshold, positioning it as one of the few profitable battery manufacturers in North America.
With over 30,000 batteries deployed without safety incidents and battery life spanning 10–15 years, compared to the typical 2–5 replacement cycles, Electrovaya commands premium pricing from Fortune 100 clients, including major retailers and logistics companies.
Its strategic advantages include domestic manufacturing capabilities through its Jamestown, New York, facility backed by a US$50.8 million Export-Import Bank loan. The facility enables vertical integration and access to lucrative defence and strategic applications requiring domestic supply chains.
Electrovaya targets a US$280 billion addressable market across material handling, defence, energy storage, and emerging applications, including robotics. The company is expanding beyond its core material handling focus into construction, mining, and electric trucks while developing next-generation solid-state batteries for high-density applications.
Financial momentum is accelerating, with 46% trailing 12-month sales growth and a 114% improvement in operating income. With established profitability, expanding manufacturing capacity, and multiple growth vectors, Electrovaya appears well-positioned to capitalize on the domestic battery manufacturing opportunity.
Is the TSX tech stock undervalued?
Analysts tracking Electrovaya stock forecast revenue to rise from US$44.6 million in 2024 to US$231 million in 2029. In this period, adjusted earnings are forecast to expand to US$0.86 per share from a loss of US$0.04 per share.
The battery maker is expected to end 2029 with free cash flow of US$77 million, compared to a free cash outflow of US$4.8 million this year.
If ELVA stock is priced at 40 times forward FCF, which is reasonable given its growth estimates, it could surge 645% within the next four years. It means a $1,000 investment in ELVA stock right now could be worth $7,500 in early 2029. At 50 times FCF, the TSX stock could return 900% to shareholders, making it a top stock to own right now.
