Novonix (ASX:NVX) shares rocketed 600% this year. Now what?

This battery industry stock has been a star performer on the ASX in 2021. Is it too late to ride the wave for 2022?

| More on:
A green fully charged battery symbol surrounded by green charge lights representing the surging Vulcan share price today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Those lucky enough to have Novonix Ltd (ASX: NVX) shares since the start of the year would have had a broad smile on their face eating their Christmas turkey.

The stock price for the battery materials company has rocketed 594% since the fireworks went off at the start of January.

So now the dilemma is what to do with a stellar performer as we head into the new year.

If you have it, do you hold onto it or take the profits? If you don't have it, is it too late to buy in or has the ship sailed?

The team at Marcus Today had some thoughts.

No profit, not much revenue (yet)

Firstly, it must be noted that Novonix is a polarising stock.

The company is a long way from turning a profit, and doesn't yet make a huge amount of revenue — not much more than $5 million — considering its valuation.

"A profit isn't expected to be achieved for a few years so it will be incredibly announcement driven," read the memo from Marcus Today.

"Deals with EV [electric vehicle] and tech companies to shore up supply chains likely to drive performance but that will come in dribs and drabs."

Massive unexplained fall in share price

Secondly, despite this year's spectacular rise, the share price has fallen almost 28% this month. 

This worries the team at Marcus Today.

"An unexplained 34% fall [in early December] should be a bit of a red flag," the memo stated.

"The move has taken some of the froth off the top, which is putting it back in the focus of 'bargain hunters'. [But] unclear if it is a bargain at current levels given the eye-watering valuation at 723x revenue."

We need to see more runs on the board

A little bit more tangible progress would be needed before the Marcus Today team would buy in.

It noted Novonix does have some heavy hitters on its board, which "looks like it has some leverage in Washington [DC]".

"Favourable legislative outcomes from the US are another possible tailwind," the memo read. 

"A period of share price consolidation around the 900c level, progress on its production capacity and a deal or two would make it look more appealing."

So for now, Marcus Today would not get involved, although if you already own Novonix shares you'd want to hold onto them.

"The near-term picture doesn't offer that much of a compelling reason to get involved," the team stated.

"Demand for its products are expected to gain momentum but until there are more cash flows, it is hard to value. No obvious reason to sell if you have decided to hold. HOLD."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Broker Notes

Stethoscope with a piggy bank in the middle.
Broker Notes

Australian health insurance: Does Macquarie prefer Medibank or NIB shares?

Medibank and NIB shares have both surged in 2025. Here’s what Macquarie expects now.

Read more »

Man smiling at a laptop because of a rising share price.
Broker Notes

9 ASX 200 shares just upgraded to strong buy ratings

Brokers have upgraded these shares amid expectations of price growth over the next 12 months.

Read more »

Red sell button on an Apple keyboard.
Broker Notes

Sell alert! Brokers say pull the plug on these 3 ASX 200 shares

Experts say it's time to press the sell button on these ASX 200 shares. Find out why.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Broker Notes

Macquarie forecasts 40% upside for this ASX All Ords stock

Let's see which stock the broker is tipping as a buy.

Read more »

Contented looking man leans back in his chair at his desk and smiles.
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

A smiling woman with a handful of $100 notes, indicating strong dividend payments
Broker Notes

Where to invest $10,000 in ASX 200 shares this month

Brokers think these shares could be top picks for your hard-earned money this month.

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy
Broker Notes

Top brokers name 3 ASX shares to buy next week

Brokers gave buy ratings to these ASX shares last week. Why are they bullish?

Read more »

Man with rocket wings which have flames coming out of them.
Broker Notes

These ASX 200 shares could rise 40%+

Big returns could be on offer from these shares according to analysts.

Read more »