ALB - 3 Battery Stocks to Buy for the Next Bull Run: March 2024
2024-03-26 12:48:11 ET
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It’s hard to use technology these days without some type of rechargeable battery. Whether it is your smartphone or your electric vehicle ( EV ), batteries are the foundation for the continued advancement of global technology. Battery technology itself is also advancing at a rapid rate. Life cycles, charging speeds and safe recycling are just a few ways in which batteries have become a sustainable and environmentally friendly method of using power.
Investing in battery stocks is a sort of a picks-and-shovels way of investing in other sectors like electric vehicles. You can choose to invest in the volatility of the EV sector which relies on growing sales with razor-thin margins. Or you can invest in batteries that power EVs and every other tech industry on the market. In this article, we will highlight three battery stocks leaders within their sectors that are worth taking a look at for your portfolio.
Albemarle (ALB)
Albermarle (NYSE: ALB ) is a North Carolina-based lithium producer that was founded in 1994. As of 2024, Albemarle is the largest lithium company in the world by market cap and among the largest producers by volume. Analysts are torn on the stock with a one-year price target range of $81 to $216 per share. It should be noted that the average target price of $147.32 is nearly $30.00 higher than its current price.
When it comes to electric vehicle batteries, lithium is one of the most important components. It should come as no surprise then that Albemarle has strategic partnerships with Ford (NYSE: F ), Tesla (NASDAQ: TSLA ), and BMW (OTCMKTS: BMWYY ). Aside from EV batteries, Albemarle also produces lithium for flame-retardant products, petroleum refining and lubricants.
It hasn’t been an easy year for Albemarle investors as shares are down nearly 18% since the start of 2024. This has coincided with a downturn in EV sector stocks fueled by declining margins and global demand for EVs. Nonetheless, as shares of ALB are currently trading at just 1.5x sales , investors should consider scooping up shares of this sector-defining company when it’s still at a reasonable sales valuation.
QuantumScape (QS)
QuantumScape (NYSE: QS ) is an American solid-state battery maker that went public via a special purpose acquisition company ( SPAC ) merger with Kensington Capital Acquisition in 2020. Currently, the company’s stock price of $6.52 sits slightly above its one-year average price target of $5.82.
QuantumScape is a perfect example of a company exceeding expectations post-IPO. At its highest point, QuantumScape was trading for more than $131 per share, giving it a higher valuation than Ford at the time! This was indicative of both the fever around EVs and the clear potential for QuantumScape’s solid-state battery technology. Since then, it has partnered with Volkswagen (OTCMKTS: VWAGY ) and has produced a prototype with a 650 kilometer ( km ) range that charges in 15 minutes with a 500,000 km lifecycle.
Compared to Albermarle, QuantumScape is a much riskier investment. Its current status as a pre-revenue company makes it difficult to value its stock right now. Nevertheless, it’s safe to say that its current price is much more reasonable than the $131 it traded at in 2020.
Solid Power (SLDP)
Solid Power (NASDAQ: SLDP ) is another speculative solid-state battery maker that was founded in 2011. Shares of SLDP are currently trading lower than the lowest analyst price target of $2.00 per share and well below the average price target of $3.30 per share.
This battery stock has a market cap of just $282 million. Yet, unlike QuantumScape, it already sees annual revenues. Over the past years, Solid Power has become a consistent solid-state battery maker that works with prominent automakers like Ford and BMW. The company also has a strong relationship with South Korean transportation and energy conglomerate SK ON .
Solid Power’s $17.4 million in trailing 12-month revenue puts the stock at about 16x sales . Looking at its sales growth, Solid Power has continued to quickly scale up its production, as evident by its three-year 86% sales compounded annual growth rate. As with QuantumScape, Solid Power is a risky investment that has the potential to compound growth for patient investors.
On the date of publication, Ian Hartana and Vayun Chugh 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.
Chandler Capital is the work of Ian Hartana and Vayun Chugh. Ian Hartana and Vayun Chugh are both self-taught investors whose work has been featured in Seeking Alpha. Their research primarily revolves around GARP stocks with a long-term investment perspective encompassing diverse sectors such as technology, energy, and healthcare.
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