The investing world remains enthralled with the GameStop (NYSE:GME) saga. And while I admit it’s super interesting to read about the Reddit war against Wall Street, one of the main themes emerging last year — electric vehicle (EV) stocks — is now relegated to the sidelines. However, we must not forget that this story still has room to run.
Tesla (NASDAQ:TSLA) is up 15.4% year-to-date (YTD), and Elon Musk is the world’s richest man. Meanwhile, every major EV company is reporting record-breaking deliveries. However, several ancillary industries are picking up pace as well. Among them are quantum glass battery stocks, which offer an interesting way to invest in the EV space.
Quantum glass batteries are often referred to as the “holy grail” for the EV space. Their intention is to solve the two most pressing problems that have kept electric vehicles from being widely adopted by the public: limited battery life and slow charging times.
That said, John Goodenough — co-winner of the 2019 Nobel Prize in Chemistry for his work as co-inventor of the now ubiquitous lithium-ion battery — headed the team that developed this solution. Since the technology can greatly help accelerate the shift away from internal combustion engines, it has captured the interest of companies and investors alike.
Several high-profile names have joined in the fray, looking to leverage this technology. Some of them might strike you as familiar, while others are pure-plays. Regardless, each one of them has a vision for quantum glass that will push EV stocks higher.
And these are three such picks that you should know about:
Now, let’s dive in and take a closer look at each one.
EV Stocks With a Twist: Albemarle (ALB)
Albemarle is a global leader as a provider of lithium for electric vehicle batteries. It produces lithium from its multitude of locations across the world, and operates through three segments: lithium and advanced materials, bromine specialties, and refining solutions.
The lithium and advanced materials segment consists of two product categories: lithium and Performance Catalyst Solutions. The bromine and bromine-based business include products used in fire safety solutions and other specialty chemical applications. It serves various end markets, ranging from petroleum refining and energy storage, food safety, and custom chemistry services.
Due to the surge in interest for EVs, ALB stock is up almost 91% the past year. Taking advantage of the situation, it launched a $1.3 billion share offering to fund its growth plans and pay down debt. Net proceeds generated from the offering will expand operations in Australia, Chile, Nevada, and China. Shares fell as a result of the offering.
However, the stock is still a bit expensive for my taste, trading 38.3 times forward price-earnings (P/E) ratio. Once the stocks shed some more value, I would buy-in, though, considering ALB stock has outperformed the S&P 500 by 104.4% and its sector by 133% in the past five years.
Founded in 1918, Panasonic is a major Japanese multinational electronics company headquartered in Kadoma, Osaka. It business is subdivided into five main business units: appliances (air conditioners, refrigerators, laundry machines, and TVs); life solutions (LED lighting, housing systems, and solar panels; connected solutions (PCs, factory automation, and in-flight entertainment systems); automotive (infotainment systems and rechargeable batteries); and industrial solutions (electronic devices).
Last year, Tesla inked a deal with Panasonic relating to the manufacture and supply of lithium-ion battery cells at the Gigafactory in Nevada. This year, the parties inked a fresh agreement that will see Panasonic continue to supply the EV maker till at least 2022. Tesla is looking to build the next-generation, lower-cost, “million-mile” electric-car battery. For the time being, though, Panasonic will be a key supplier for Elon Musk’s billion-dollar baby.
Separately, Panasonic and Toyota (NYSE:TM) are collaborating on developing a new generation of batteries for electric vehicles. The joint venture will work on prismatic batteries to sell to other automakers.
Overall, the company’s battery segment will continue to grow. But when you are investing in this one, you can rest easy. It’s such a well-diversified company that it will keep you happy in the interim. At 0.5 times price-sales (P/S), you gain exposure to this high growth segment at a bargain.
EV Stocks With a Twist: QuantumScape (QS)
We end this list with the riskiest prospect out there in this space. QuantumScape is developing the next-generation solid-state lithium-metal batteries for use in electric vehicles.
Bill Gates is a backer, and Volkswagen (OTCMKTS:VWAGY) is an institutional investor and a client — so it definitely has some heavy hitters supporting it. However, as is the case with many special purpose acquisition company (SPAC) plays, shares went parabolic after going public through a merger with Kensington Capital Acquisition Corp., a “blank check” shell corporation.
The fairytale did not last long, though. QS stock plunged 41% on Jan. 4. The fall is attributable to the company filing a Resale S-1 form on Dec. 31. Investors interpreted the filing as the company selling shares to take advantage of the stock’s surge in value, which would dilute the holdings of existing stockholders. Others theorized QuantumScape’s institutional investors are gearing up to sell shares.
However, its founder Jagdeep Singh has dismissed any concerns that the fundamental story changed overnight due to the drop. I agree. There is nothing to suggest anything significant happened with the fundamentals. It’s just what comes with investing in the risky EV SPAC space.
I won’t make any arguments against overvaluation. To put things in perspective, Tesla’s P/E ratio sits at 208.22. So when you are buying QS stock, you buy it for the potential multi-bagger opportunity and little else.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.