Alliance Resource (ARLP) Invests $25M in Ascend Elements
Alliance Resource Partners, L.P. ARLP recently announced that it has made a strategic investment of $25 million in Ascend Elements, Inc., as part of its $460 million Series D funding round.
North America's first commercial-scale manufacturing facility producing cathode materials for Electric Vehicle (EV) batteries will be constructed using this capital, coupled with the $480 million in grants awarded by the Department of Energy. The facility, located near Hopkinsville, KY, will manufacture enough cathode materials for 750,000 EVs per year on completion.
Rationale Behind the Investment
With industries across the board transitioning rapidly toward a clean energy environment, increasing electrification of transportation is in trend for reducing emissions of CO2 and air pollutants. This, in turn, has led to a solid adoption of EV in the transport sector, thereby boosting the market for EV batteries. Looking ahead, per a Mordor Intelligence Report, the EV battery market size is expected to grow from $50.25 billion in 2023 to $144.48 billion by 2028, at a compound annual growth rate of 23.52% during 2023-2028.
To address the growing demand of EV batteries, production of critical battery components like cathode needs to be ramped up. Such growing demand, along with Ascend Elements' proven leadership, proprietary technology and recent commercial success with high-quality original equipment manufacturers is likely to have given Alliance Resource Partners the confidence to expand its strategic relationship with Ascend.
This investment, like the one ARLP made last year in Francis Energy to expand the latter’s EV charging network, reflects Alliance Resource’s efforts to expand its footprint in the booming EV market.
Price Performance
Over the past six months, shares of ARLP have lost 3.2% compared with the industry’s decline of 11.1%.
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Zacks Rank & Key Picks
Alliance Resource currently has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the same sector are Constellation Energy Corp. CEG, SunCoke Energy Inc. SXC and Texas Pacific Land Corp. TPL. CEG sports a Zacks Rank #1 (Strong Buy), while both SXC and TPL carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Constellation Energy’s long-term earnings growth rate is 23.3%. The Zacks Consensus Estimate for 2023 earnings per share (EPS) has moved up 28.4% in the past 60 days.
The Zacks Consensus Estimate for SunCoke’s 2023 EPS has moved up 1.3% in the past 60 days. It delivered an average earnings surprise of 91.48% in the past four quarters.
The Zacks Consensus Estimate for Texas Pacific’s 2023 EPS has moved up 6.4% in the past 60 days. It delivered an average earnings surprise of 1.25% in the past four quarters.
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