Battery stocks haven’t fared well for much of 2024, but a big rally has put them back in the spotlight. The Global X Lithium & Battery Tech ETF (ticker: LIT) gained more than 20% in September. The fund remains down by 3.3% year to date as of Oct. 7, while the S&P 500 is up by 19.4% during the same time frame.
Batteries are growing in demand as consumers and businesses look for alternative energy sources. According to the International Energy Agency, battery demand for electric vehicles is projected to jump tenfold in 10 years.
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The rising demand for EVs will also spark additional traction for lithium. This mineral is a critical component of EV batteries. Lithium also forms the bedrock of many popular devices, such as iPhones and laptops.
Investors who are looking for long-term opportunities may want to take a closer look at the battery sector. It’s poised to benefit as renewable energy gains momentum. These battery stocks are shaping up to be leaders within the industry, once they get their mojo going:
| Battery Stock | YTD Return | 5-Year Return |
| Honeywell International Inc. (HON) | -1.5% | 38.2% |
| Albemarle Corp. (ALB) | -26.9% | 68.4% |
| Solid Power Inc. (SLDP) | -13.1% | -87.7%* |
| QuantumScape Corp. (QS) | -19.9% | -59.8%** |
| Tesla Inc. (TSLA) | -3.1% | 1,419.4% |
| Enphase Energy Inc. (ENPH) | -19.5% | 347.8% |
*Return for past three years as of Oct. 7. **Return for past four years. Five-year return not available.
Honeywell International Inc. (HON)
Honeywell specializes in aviation, automation, performance materials and technology. The firm offers a wide range of renewable and energy storage solutions. Its cost-effective Battery Energy Storage System makes it easier for companies to handle all stages of battery usage and recycling. The technology helps businesses reduce utility bills and increase uptime and reliability.
Battery storage was one of the components that helped Honeywell report 5% year-over-year revenue growth in the second quarter. Sales reached $9.6 billion while earnings per share exceeded the high end of guidance at $2.36.
Honeywell has regularly rewarded investors with stock buybacks and dividend distributions. The firm allocated $6.4 billion toward those initiatives in the second quarter and currently has a generous 2.2% yield. Honeywell has increased its dividend 14 times since 2010, with another dividend hike due in the fourth quarter. The annual dividend will become $4.52 per share, marking a 4.6% increase compared to last year’s dividend.
Honeywell shares are down by 1.5% year to date but have risen 38.2% over the past five years.
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Albemarle Corp. (ALB)
If the battery sector continues to grow, expect Albemarle to be a top beneficiary. The firm is the largest provider of lithium for electric vehicle batteries. It’s also the leading provider of bromine and other essential resources.
Albemarle prioritizes four areas: mobility, energy, connectivity and health. Its resources power up electric vehicles and enable energy-efficient buildings. The company also enhances the safety of electronics, wires, cables, medicine, disinfectants and other products.
Although Albemarle covers a lot of ground and is poised to benefit from positive developments in the battery industry, the stock has had a bad year. Shares are down by 26.9% year to date. A wider lens reveals a 68.4% gain over the past five years, though, and investors get a decent 1.6% dividend yield.
Albemarle is dealing with a rough stretch as the company pulled together only $1.4 billion in sales in the second quarter. That figure is down by 40% year over year, which the company attributed to lower pricing in its energy storage division. Turbulence is a common trend among battery stocks, but Albemarle’s vast market share suggests that this downturn is temporary.
Solid Power Inc. (SLDP)
Solid Power is a speculative battery stock that can generate sizable gains if the industry shifts from traditional lithium-ion batteries to solid-state batteries. Current lithium-ion batteries are prone to fires and become less effective when temperatures cool. Solid-state batteries, by comparison, can lead to faster charging times and increased range.
A successful solid-state battery could make electric vehicles and other renewable energy sources more mainstream. Solid Power is one of the leaders in the industry, and it has poured over a decade into research and development.
Although Solid Power is in a good position if solid-state batteries become the new standard, it requires a lot of faith from investors. The firm reported $5.1 million in revenue during the second quarter, which was only up by $200,000 from the same quarter last year.
Solid Power’s $233 million market cap highlights the stock’s rich valuation, given that it barely made over $5 million in the recent quarter. The stock is down 13.1% year to date and down 87.7% over the past three years as of Oct. 7, so it requires plenty of patience, and it’s only suitable for investors with a high risk tolerance.
QuantumScape Corp. (QS)
If you have the risk tolerance to accumulate shares in Solid Power, you may also want to give QuantumScape a look. It’s another solid-state battery maker that has been in the industry since 2010. The firm believes that its anode-free solid-state batteries can gain market share and become the leading choice among next-gen batteries.
The company has 800 employees and more than 300 patents. QuantumScape is preparing for Cobra production in 2025 as it strives to transition from a prototype to a product. The corporation is valued at about $3 billion, and that’s after a 19.9% year-to-date decline.
QuantumScape has established several benchmarks for creating a widely adopted solid-state battery. The company is aiming for a battery with a minimum of a 12-year lifecycle with energy capacity that exceeds 300 miles. QuantumScape also aims to offer fast charging that can bring a battery from 10% to 80% within 15 minutes at 95 degrees Fahrenheit.
Tesla Inc. (TSLA)
Tesla has established itself as the leading EV maker. The corporation made electric vehicles mainstream and has outperformed the S&P 500 for many years. Although shares are down 3.1% year to date, the stock has surged by 1,419.4% over the past five years as of Oct. 7. While the stock is expensive, it’s well positioned to capitalize on any positive developments in the battery industry and renewable energy as a whole.
The company has been branching out beyond automobiles, and Powerwall is a notable segment for battery investors. Powerwall is a compact home battery that stores energy from the sun, allowing people to maintain power during outages. This product also makes it easier for consumers to go off-grid. You can store energy with Powerwall and use it whenever you desire. If you have excess energy, you can even sell your reserves to the grid and make extra cash.
Powerwall has several features that help people save money and obtain renewable energy. It’s one of the components that helped Tesla generate $25.5 billion in second-quarter revenue. Auto sales still make up the majority of total sales, but it’s notable that energy generation and storage revenue more than doubled year over year to reach $3 billion. Further diversification beyond auto sales can help Tesla hold onto its lofty valuation and accumulate long-term returns for patient investors.
Enphase Energy Inc. (ENPH)
Enphase Energy is a global energy technology company that offers solar generation, storage and energy management solutions. Its IQ EV Charger helps homeowners minimize their energy costs through its integration with Enphase’s solar and battery systems. The product is available in the U.S. and Canada, with plans to expand in Europe soon. The company’s July 2024 investor presentation showed that the U.S. EV market is growing at a 34% compound annual rate, indicating plenty of potential for investors.
Enphase has several battery products and other solutions that have helped the stock outperform the S&P 500. Although shares are down by 19.5% year to date, they have delivered a 347.8% gain over the past five years. Enphase should attract more customers as electric vehicles become more popular. High energy costs can also prompt people to tap into their own energy sources to save on their utility bills. These catalysts can help ENPH stock get back on track and deliver long-term gains for investors.
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6 Best Battery Stocks to Buy Now originally appeared on usnews.com
Update 10/08/24: This story was previously published at an earlier date and has been updated with new information.
