It’s not too late to get a piece of the battery-fueled action.
With renewable energy on the rise, investors are looking for ways to get a piece of the action. However, the easiest inroad isn’t clear due to the wide variety of options. Focusing on battery stocks is a safe starting point. Battery technology is used across the spectrum of renewable energy, powering electric vehicles, or EVs, and storing the energy generated by solar and power utility companies. The lithium required by the projected demand for batteries is upsetting the mining business, creating a massive disparity between supply and demand. These factors converge and make battery stocks ripe for significant growth and rosy returns. Here are six of the best battery stocks to buy now.
NextEra Energy Inc. (ticker: NEE)
NextEra is the world’s largest solar and wind power producer. Emphasizing partnerships with utility companies has benefited it greatly, enabling both consistent revenue and extensive growth opportunities. The company will provide a significant portion of the 15 gigawatts of planned utility battery storage by 2024 within the U.S., and its subsidiary Florida Power & Light recently implemented the world’s largest solar-powered battery. With President Joe Biden pausing solar tariffs for the next two years, operating costs are expected to fall, giving the company more room to grow after the uncertainty caused by supply disruptions over the past year. NextEra is one of the most established companies on this list, with a market capitalization around $140 billion, and trades at a reasonable forward price-earnings ratio of about 26.
Solid Power Inc. (SLDP)
An investment darling of major automakers like Ford Motor Co. (F) and BMW, Solid Power is the leading force behind solid-state battery technology. This type of battery uses a solid electrolyte layer between the cathode and anode, which increases energy density and decreases overall weight while also providing a safer profile compared to current lithium-ion batteries. Such a battery at scale would be a major boon to the EV industry, enabling increased range and shorter charging periods. Solid Power plans to send batteries to automakers by the end of 2023. If all goes well, the batteries will start production by 2024. And thanks to its proprietary technology, Solid Power batteries can be built with pre-existing production lines. Solid Power is a stock to keep an eye on, with a market capitalization of $1.1 billion and about $550 million worth of cash on hand, the company is well positioned to ease into full-scale production of its batteries once testing ends.
Honeywell International Inc. (HON)
Honeywell designs and manufactures technology for the aeronautics, safety and energy spaces. It announced a new “flow battery” in 2021 that enables utility companies to store significant amounts of energy from renewable sources for up to 12 hours. The company partnered with utility company Duke Energy Corp. (DUK) to fine tune the technology with a project in Mount Holly, North Carolina. Investors can expect battery production to become an increasingly larger part of Honeywell’s revenue stream based on signed agreements with utility companies, such as the strategic alliance with Duke Energy, which will bring Honeywell battery energy storage systems to cities across the country. One of the largest and most diversified companies on this list, Honeywell is a safer bet for investors looking to get into battery investments without excessive exposure to risk. Honeywell has a market capitalization of around $120 billion and a forward price-earnings ratio of about 21.
Lithium Americas Corp. (LAC)
Lithium Americas is a lithium mining startup that was founded in Vancouver, Canada. Company holdings include two mines in Argentina and the largest lithium reserves in the U.S. located in Thatcher Pass, Nevada. LAC is slated to begin stage one mining at one of its Argentinian mines, and despite many judicial hurdles, to begin construction of the Thatcher Pass mine this year. That would be huge for LAC, as the Thatcher Mine is projected to have a 46 year life span and produce enough lithium to meet 25% of global demand. There are still some logistical barriers to overcome with the Thatcher mine, but given that lithium demand is projected to far outpace supply, LAC is a potentially rewarding growth stock, with revenue expected to surge more than 500% in 2023.
Freyr Battery SA (FREY)
Norway-based Freyr is positioned to become one of the largest players in the battery market. Freyr is in the process of constructing factories to build out capacity. Using battery technology offered by 24M, a Massachusetts Institute of Technology spinoff, Freyr is on track to achieve an annual 43 gigawatt-hour battery production capacity by 2025 — or roughly enough to fully charge 800,000 Tesla Inc. (TSLA) Model 3s. Production is expected to begin next year, and Freyr has already signed a deal with Honeywell to provide 19 gigawatt-hours worth of batteries between 2023 and 2030. Despite being one of the smaller companies on the list, with a market capitalization of about $850 million, Freyr has about $523 million of cash on hand, which will help its transition toward full-scale production. Analysts expect revenue to balloon from $5 million in 2022 to more than $100 million in 2023.
QuantumScape Corp. (QS)
While QuantumScape’s timeline for battery production is further out than its competitors, it remains attractive due to notable backers such as Bill Gates and Volkswagen AG (VWAGY). Splitting its contracts between EV makers and battery storage companies, QuantumScape plans to begin commercial production of its solid-state batteries by 2025, making this an investment well-suited for the patient and risk-tolerant. Still, solid-state batteries promise to revolutionize the EV industry. This gives even latecomers a competitive edge in the game. And if the technology is as groundbreaking as its management claims, QuantumScape could shape up to be a valuable holding. Although it has yet to begin production, the company has solid financial footing to steer it into the future. At a market cap of $3.7 billion, QuantumScape is still pre-revenue, which underscores both its risk and its potential. In either case, QS stock isn’t for the faint of heart.
6 best battery stocks to buy now:
— NextEra Energy Inc. (NEE)
— Solid Power Inc. (SLDP)
— Honeywell International Inc. (HON)
— Lithium Americas Corp. (LAC)
— Freyr Battery SA (FREY)
— QuantumScape Corp. (QS)
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6 Best Battery Stocks to Buy Now originally appeared on usnews.com
