Issue #47

The real winners of electrification are supplying power, not selling cars

The next phase of the energy transition won’t be driven only by flashy EV makers or headline-grabbing battery startups — it will be built by the companies quietly powering electrification behind the scenes. From mission-critical lithium systems supporting data centers, defense, and logistics… to next-generation extraction technologies securing America’s domestic lithium supply, the real opportunity is unfolding in industrial energy infrastructure.

👉 One company is already generating record cash flow by supplying lithium and advanced power systems to data centers, 5G networks, and defense programs.
👉 The other is reshaping how lithium is produced in the U.S., backed by government funding and a global energy giant.
👉 Both sit at the intersection of electrification, energy security, and long-term structural demand — yet remain far less crowded than mainstream EV plays.

In this edition, we break down two high-conviction energy transition stocks positioned to benefit as lithium demand, infrastructure spending, and domestic supply chains accelerate into 2026.

EnerSys (NYSE: ENS)

EnerSys (NYSE: ENS) is a global leader in stored energy solutions, providing high-performance battery and power infrastructure across industrial, telecommunication, and defense sectors. While traditionally rooted in lead-acid technology, EnerSys has aggressively pivoted toward advanced lithium-ion and Thin Plate Pure Lead (TPPL) solutions, positioning itself as a critical player in the global energy transition and electrification megatrend.

Business Model and Revenue Streams 📦

EnerSys operates a specialized industrial model, shifting from a pure battery manufacturer to a "complete power solution provider." Its strategy focuses on integrating energy storage with power conversion and management software. The company earns revenue through three primary segments:

• Energy Systems: This is a vital growth engine, providing power solutions for 5G telecommunications, broadband, and data centers. It includes enclosures, rectifiers, and lithium-ion backup systems that ensure "always-on" connectivity.
• Motive Power: This segment serves the logistics and warehousing industry. EnerSys has seen a massive shift here as customers replace traditional lead-acid forklift batteries with high-efficiency NexSys iON lithium solutions, which offer faster charging and zero maintenance.
• Specialty: Focusing on high-margin, mission-critical applications, this segment provides power for the aerospace and defense sectors, including satellites and military vehicles.

EnerSys is currently navigating a complex macroeconomic landscape. While global demand for data center power and 5G infrastructure provides a strong tailwind, the company has faced volatility due to tariff uncertainties. Management recently paused full-year guidance to account for potential trade policy shifts, though they are actively mitigating this by increasing domestic production. Furthermore, the company is a major beneficiary of the Inflation Reduction Act (IRA), specifically the 45X tax credits, which have significantly bolstered their manufacturing margins in the U.S.

Recent Performance and Corporate Developments 📈

EnerSys reported standout results for its second fiscal quarter of 2026 (reported November 2025), characterized by a significant earnings beat and robust cash flow.

Q2 2026 Financial Highlights: 💰

• Total Revenue: Net sales reached $951 million, up 8% year-over-year, driven by improved demand across almost all end markets.
• Earnings Per Share (EPS): Adjusted diluted EPS came in at $2.56, comfortably beating analyst estimates of $2.36.
• Margin Expansion: The company achieved a gross margin of 29.1%. Even excluding the IRA tax benefits, margins remained stable, reflecting strong pricing power and operational discipline.
• Cash Flow: A major highlight was the generation of $197 million in free cash flow, a massive jump from the $3 million reported in the same quarter the previous year.

Strategic Initiatives and Mergers: 🤝

EnerSys has been active on the M&A front to bolster its lithium and defense capabilities. A key recent development was the acquisition of Bren-Tronics, which expanded its footprint in the military lithium-ion battery market. In August 2025, the company also sent a strong signal of confidence to the market by announcing a $1 billion increase to its stock repurchase authorization and a 9% hike in its quarterly dividend.

​
​

Path to Profitability and Fair Value 🎯

EnerSys has maintained consistent profitability, but the "new" EnerSys is focused on margin optimization. Its "EnerGize" strategic framework aims to reallocate capital toward higher-return lithium and TPPL products while cutting costs in legacy lines.

In terms of fair value, the stock presents a classic "growth at a reasonable price" (GARP) scenario. As of late 2025, the stock trades at a P/E ratio of approximately 16x, which is a significant discount compared to the broader electrical equipment industry (average ~31x). While some DCF models suggest the stock has run up significantly (gaining over 60% in 2025), its leadership in the lithium-motive power space and its role in AI-driven data center growth suggest there is still intrinsic value to be unlocked as the market re-rates the company from a "battery maker" to a "tech-infrastructure provider."

Analyst Estimates and Ratings 📊

• Consensus Rating: The stock holds a "Strong Buy" consensus. In the last 30 days, multiple analysts have reiterated their bullish stance, citing the company's record cash flow and the successful integration of its "New Ventures" product line.
• Price Target: Wall Street analysts have set a consensus price target of approximately $144 to $152, with recent highs tracking the stock's surge toward the $150 level.
• Recent Momentum: Roughly 67% of covering analysts rate the stock as a "Strong Buy," noting that earnings growth is currently outpacing revenue growth due to massive operational efficiencies.

Investor-Focused Takeaway: Is ENS Right for Your Portfolio?

EnerSys is no longer just a "lead-acid" company; it is a diversified energy giant. It offers a way to play the lithium-ion battery boom through industrial applications rather than the volatile passenger EV market.

What to Watch in the Near Term: 📈

• Trade Policy: Monitor updates on tariffs, as this remains the primary headwind for their global supply chain.
• Data Center Demand: The explosion of AI is driving a need for massive backup power; EnerSys’ ability to capture this segment will be a key growth catalyst.
• IRA Benefits: Watch for any legislative changes to the 45X tax credits, which currently provide a significant cushion to their bottom line.

Recommendation:

EnerSys (ENS) is a top-tier pick for investors seeking exposure to the electrification of the global economy. With record-breaking cash flow and a clear shift toward high-margin lithium solutions, it remains one of the most fundamentally sound "lithium stocks" in the current market.

Standard Lithium (NYSE: SLI)

Standard Lithium (NYSE: SLI) is a leading development-stage company focused on revolutionizing the North American lithium supply chain. Unlike traditional mining firms, Standard Lithium functions more like a chemical engineering and technology company. Its core mission is to extract battery-quality lithium from underground brine sources in the Smackover Formation—spanning Arkansas and East Texas—using advanced Direct Lithium Extraction (DLE) technology.

Business Model and Revenue Streams 📦

Standard Lithium’s business model is centered on technology-driven extraction rather than traditional open-pit mining. The company aims to be a low-cost, sustainable producer by leveraging existing industrial infrastructure and proprietary DLE processes. Currently, the company does not have active revenue streams as it is in the "pre-commercial" phase, but its future income is structured around:

• Lithium Carbonate Sales: The primary revenue driver will be the sale of battery-grade lithium carbonate to the EV and energy storage markets. Its Southwest Arkansas (SWA) Project is designed to produce 22,500 tonnes per year in its first phase.
• By-product Monetization: The company’s resources also contain significant amounts of potash and bromine. Recent 2025 reports highlight these as secondary revenue opportunities that could offset lithium production costs.
• Joint Ventures and Partnerships: A key part of their model is the "Smackover Lithium" joint venture with Equinor, where Standard Lithium maintains a 55% majority stake. This partnership provides the technical and financial muscle of a global energy giant.

Macroeconomic policies are currently a massive tailwind for the company. The U.S. Department of Energy (DOE) recently finalized a $225 million grant for the SWA Project. Furthermore, the push for domestic mineral security under the Inflation Reduction Act makes Standard Lithium’s Arkansas assets strategically critical for the U.S. battery ecosystem.

Recent Performance and Corporate Developments 📈

For a development-stage company, "performance" is measured by project milestones and capital preservation rather than quarterly sales. Standard Lithium’s recent reports show a company successfully de-risking its path to production.

Recent Financial and Project Highlights: 💰

• Capital Strength: In October 2025, the company closed an upsized $130 million public offering, which was oversubscribed by institutional investors. This leaves them well-capitalized to reach a Final Investment Decision (FID).
• Net Loss (Q1 2026): For the quarter ending September 30, 2025 (Fiscal Q1 2026), the company reported a net loss of $6.1 million. This was a "beat" compared to analyst expectations of a $0.04 loss per share, coming in at -$0.03.
• Massive Financing Interest: In December 2025, the company announced it had received indications of interest for over $1 billion in project debt financing for the SWA project, a major step toward full construction.

Strategic Initiatives and Mergers: 🤝

The defining corporate development of late 2025 is the Equinor partnership, which has transitioned from a deal on paper to a fully integrated joint venture. Additionally, the company completed its Definitive Feasibility Study (DFS) for the SWA project, confirming an internal rate of return (IRR) of 20.2% and a 20-year operating life. They have also expanded into East Texas, discovering the highest reported lithium-in-brine grades in North America (616 mg/L).

Path to Profitability and Fair Value 🎯

Standard Lithium's path to profitability is tied to its 2028 production target. The company has already proven its technology works at a pilot scale with over 99% lithium recovery rates. By skipping the evaporation pond method, they can move from extraction to a finished product in weeks rather than years.

Regarding fair value, the stock is currently in a "re-rating" phase. After a volatile 2024, the stock rallied significantly in late 2025 as the $225M DOE grant and $1B financing interest were confirmed. Analysts suggest that while the company is not yet earning, its Net Asset Value (NAV) is substantially higher than its current market cap, especially given its low projected operating costs of roughly $4,516 per ton.

Analyst Estimates and Ratings 📊

• Consensus Rating: The stock currently carries a "Buy" consensus. In the last 30 days, it has been one of the most favored speculative "Buy" stocks in the lithium space.
• Price Target: Analysts have set an average 12-month price target of approximately $5.25, representing significant upside from recent trading levels near $4.70.
• Sentiment: Sentiment is overwhelmingly positive following the successful capital raise and the maiden resource report in East Texas, which added 2.2 million tonnes of Lithium Carbonate Equivalent (LCE) to their books.

Investor-Focused Takeaway: Is SLI Right for Your Portfolio?

Standard Lithium is a high-reward, speculative play. It is perfect for investors who want a "pure play" on American lithium technology and are willing to wait for the 2028 production window.

What to Watch in the Near Term: 📈

• Final Investment Decision (FID): Expected in early 2026, this will be the "green light" for full-scale construction.
• Lithium Spot Prices: While Standard Lithium's costs are low, a recovery in global lithium prices would drastically improve the projected IRR of their projects.
• Construction Start: Watch for the official groundbreaking in Arkansas in 2026, which would transition the company from a developer to a builder.

Recommendation:

Standard Lithium (SLI) is a "Buy" for long-term growth investors. Its combination of a massive domestic resource, a billionaire-backed partner (Equinor), and heavy U.S. government support makes it one of the most de-risked lithium developers in the market today.

Final Take: Powering Electrification From the Ground Up

While most investors chase volatile EV makers and headline-driven battery startups, EnerSys (ENS) and Standard Lithium (SLI) are positioned where the real value in electrification is being built — power infrastructure and domestic supply security.

🔋 EnerSys (ENS) — Cash-Flow Machine Powering the Digital Economy
✔ Record free cash flow driven by data centers, 5G, logistics, and defense
✔ Rapid shift toward high-margin lithium-ion and advanced power systems
✔ Share buybacks + dividend growth signal confidence and durability
➤ Best for: Investors seeking a profitable, industrial-scale lithium play with exposure to AI infrastructure and mission-critical energy demand.

🧪 Standard Lithium (SLI) — Rewriting How America Produces Lithium
✔ Direct Lithium Extraction (DLE) with low costs and faster timelines
✔ Backed by $225M DOE grant and a majority JV with Equinor
✔ Over $1B in financing interest ahead of 2026 FID
➤ Best for: Long-term investors looking for asymmetric upside in U.S. lithium supply and energy security.

Investor Insight

🏗️ Want cash flow + infrastructure exposure? → ENS
​ 🧬 Want high-upside domestic lithium optionality? → SLI

Bottom Line:

The electrification trade is maturing — and the next winners won’t be selling cars, they’ll be supplying the power and materials behind them. With strong fundamentals, strategic tailwinds, and far less crowded positioning, EnerSys and Standard Lithium offer two distinct ways to play the energy transition as infrastructure spending and lithium demand accelerate into 2026.

Sometimes the smartest way to ride a megatrend… is to own what everything else depends on.

​
Happy Trading
​— Team Premium Stock Alerts