Energy & Critical Metals
3 Battery Stocks You Better Be Buying on Each and Every Dip
The electric vehicle (EV) battery market is still at an early growth stage. With EV adoption likely to increase beyond the decade, there is significant…
The electric vehicle (EV) battery market is still at an early growth stage. With EV adoption likely to increase beyond the decade, there is significant growth potential for EV battery companies. It’s still a good time to look at some of the best battery stocks to buy for multibagger returns.
Talking about the growth potential, the EV battery market was valued at $50.12 billion in 2022. The market size is expected to swell to $250.55 billion by 2030. This would imply a five-fold growth in market size and indicates the big opportunity.
When considering some of the best battery stocks to buy, I would also look at proxy investment themes. As an example, lithium stocks are likely to benefit as the demand for EV batteries surges. Further, emerging technology and innovation can be a game-changer. A good example is investment in potential commercialization of solid-state batteries.
With these themes in focus, let’s talk about three of the best battery stocks to buy.
Panasonic Holdings (PCRFY)
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Panasonic Holdings (OTCMKTS:PCRFY) stock has trended higher by 48% year-to-date. The stock remains attractively valued at a forward price-earnings ratio of 11.3. Without doubt, it’s among the best battery stocks to buy and hold.
It’s worth noting that Panasonic has been pursuing aggressive capacity expansion. The company has one operational EV battery factory in the U.S. Further, the second factory is under construction with the company already having planned the location for the third.
Recent reports indicate that the company is targeting to build four more factories with a target to significantly ramp-up capacity by 2031. New factories will ensure that revenue growth is steady. Further, PCRFY stock has an attractive dividend yield of 1.74% and I expect healthy dividend growth in the coming years.
Panasonic is also high on innovation and that’s one factor that will ensure that the company increases market share. As an example, the company is targeting to achieve a 20% increase in battery energy density by 2030.
Solid Power (SLDP)
Source: T. Schneider / Shutterstock.com
Solid Power (NASDAQ:SLDP) stock has remained depressed with a downside of 56% in the last 12 months. However, I believe that Solid Power is possibly the best bet in the solid-state battery space. If the company can successfully commercialize the batteries, SLDP stock returns will be multi-fold.
One reason to be bullish on Solid Power is the backing of strong automotive partners. This includes Ford (NYSE:F) and BMW (OTCMKTS:BMWYY). The backing ensures financial support coupled with accelerated efforts in research and development.
In December 2023, Solid Power licensed its cell design and manufacturing process to BMW. This will ensure parallel research and development efforts. It’s also worth noting that Solid Power will be delivering EV cells to automotive partners in 2023 for validation testing. It’s likely to be an important catalyst for the stock.
Albemarle Corporation (ALB)
Source: IgorGolovniov/Shutterstock.com
Albemarle Corporation (NYSE:ALB) stock is another name among the best battery stocks to buy. ALB stock is already undervalued at a forward price-earnings ratio of 9.1.
It’s a proxy play as higher demand for batteries would imply a surge in lithium demand. As a matter of fact, it’s expected that the lithium supply gap will be acute by 2035. This will translate into higher price realization and cash flow growth for Albemarle in the coming years.
In terms of business fundamentals, the following point is worth noting. Albemarle reported a lithium conversion capacity of 200 ktpa as of 2022. The company expects to boost capacity in the range of 500 ktpa to 600 ktpa by 2030. With the tripling of capacity, the company is poised for sustained revenue growth and cash flow upside.
An important point to note is that Albemarle expects operating cash flow in excess of $3 billion for 2023. With strong fundamentals, dividend growth is also likely to be robust.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
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