Grading 7 of the Biggest Battery Stocks as an All-EV Future Looms Larger

battery stocks - Grading 7 of the Biggest Battery Stocks as an All-EV Future Looms Larger

Source: Shutterstock

Even the biggest gearhead must recognize that the tide of automotive transportation is shifting. Although electric vehicles only represent a fraction of cars on the road, this is the sector that’s expanding at an exponential rate. Thanks to its efficiency, minimal environmental impact and resounding performance metrics, EVs are the future. But they’re not getting anywhere without a power source, which is where battery stocks come in.

Geopolitically, the case for publicly traded companies levered to this digital revolution couldn’t be any clearer. According to a Deloitte report, many countries have proposed cutting emissions drastically. For instance, the U.K. is targeting net zero emissions by 2050, matching the initiative set forward under the Biden plan. By then, Germany hopes to have cut greenhouse gas emissions by 95% compared to 1990 levels.

Earlier this week, President Joe Biden unveiled a roughly $2.25 trillion infrastructure and stimulus plan that included a call for broad investment in electric vehicle. Bloomberg NEF estimates EVs will make up 10% of all vehicles sold by 2025 and increase to more than 29% by 2030. That’s made EVs one of the hottest investment themes out there today. Naturally, with a flood of electric vehicles set to hit the market, it creates a huge market for various products and services that empower EVs

Obviously, they’re not going to achieve those targets unless we have clean emissions across transportation units, ranging from personal EVs to large-scale commercial vehicles. Undoubtedly, battery technology will play a huge role in this progression, bolstering the bullish thesis for battery stocks.

Also, you can make the argument that companies in the battery supply chain are safer bets than, say, individual EV manufacturers. Frankly, we don’t know how consumer tastes will evolve over the next few decades. And once EVs become accessible to middle-income folks, the present competitive hierarchy could change drastically. Therefore, you may be better off putting your money into battery stocks:

  • Panasonic (OTCMKTS:PCRFY)
  • Sociedad Quimica y Minera de Chile (NYSE:SQM)
  • Energizer Holdings (NYSE:ENR)
  • Lithium Americas (NYSE:LAC)
  • Global X Lithium & Battery Tech ETF (NYSEARCA:LIT)
  • Energous (NASDAQ:WATT)
  • Romeo Power (NYSE:RMO)

For this list, I tried to keep the ideas as diversified as possible. While EVs represent the overriding theme, I included some investments you may not be familiar with. So without further ado, here are seven battery stocks that could help electrify the future.

Panasonic (PCRFY)

A Panasonic (PCRFY) sign hanging in Beijing, China. generation z
Source: testing/Shutterstock.com

Thanks to its longstanding partnership with Tesla (NASDAQ:TSLA), Panasonic quietly rode coattails as the company shifted its focus from personal consumer electronics — which don’t have the greatest profit margin — to battery packs for electric vehicles. But despite being an integral component of Tesla’s success, it’s clear that the automaker enjoyed the lion’s share of the spoils.

Nevertheless, battery stocks may be in a solid position to accrue significant gains, which potentially bodes well for PCRFY stock. As great of a success story as Tesla has been, in my view, it’s unlikely to continue charging up the ranks. Primarily, competition is heating up, which will eventually give prospective EV buyers many choices. These new players will presumably try to compete for buyers at the more reasonable end of the income spectrum, putting pressure on Tesla.

Further, it seems that Panasonic is thinking along the same lines. Outgoing Panasonic CEO Kazuhiro Tsuga stressed that the company must diversify away from Tesla and make batteries compatible with other EV makers. If it succeeds, PCRFY stock could become one of the top battery stocks in the global markets. This is one to watch closely.

Sociedad Quimica y Minera de Chile (SQM)

a cart filed with gold in a gold mine
Source: Shutterstock

Though not one of the pure-play battery stocks, Sociedad Quimica y Minera de Chile is nevertheless incredibly relevant to the sector for its lithium mining projects. Headquartered in Santiago, Chile, the region is home to a key source of global lithium. Together with Bolivia and Argentina, the intersection where the three countries meet forms the Lithium Triangle, an area which contains 75% of the world’s lithium supply beneath their salt flats.

Further, SQM stock is worth consideration for the underlying geopolitical stability. True, South America as a whole isn’t what you call the bastion of political stability. However, Chile itself ranks reasonably well according to the political stability index with a score of 0.21. Only Uruguay is higher with a score of 1.05, while the region (where data was available) came in at an average of -0.24.

More importantly, I look at SQM stock as an investment in ticket selling. Yes, you can easily make the argument that EVs are the future. But we don’t know when that future will arrive nor will we know which brand will dominate.

With battery stocks, you can take the guesswork out of the equation by investing in the core commodity.

Energizer (ENR)

numerous blue-colored batteries lithium stocks
Source: Shutterstock

Naturally, whenever the discussion of battery stocks comes up, nearly everyone talks about lithium batteries. Thanks to the attributes of lithium — namely more energy output and lighter weight compared to other sources — such batteries are ideal for electronic devices. Since we’re on our smartphones all day, it’s only logical that our attention gravitates toward this direction.

However, it’s time to give alkaline battery stocks some love and I couldn’t think of a better name that Energizer. True, ENR stock might seem like a yesteryear investment but here’s the deal — no platform is without its set of pros and cons. With good ole fashioned alkaline, it brings to the table a higher discharge rate (i.e., you can use it for longer), are relatively economical and offer long storage life.

Where might these attributes come in handy besides powering the remote control, you might ask? Well, there’s a reason why emergency supply kits come packed with alkaline batteries. Also, Energizer has a range of outdoor lighting equipment, something that many Americans have been thinking about due to the recent Texas winter storm. It’s not sexy but I’d take a second look at ENR stock.

Lithium Americas (LAC)

a lithium ion battery
Source: Olivier Le Moal/ShutterStock.com

A bit more on the speculative side, Lithium Americas nevertheless makes for one of the more promising battery stocks to buy for patient investors. Admittedly, the situation for LAC stock isn’t a pretty one at the moment. Since its record close of $26.82 on Jan. 19, 2021, shares are at time of writing down nearly 46%.

Nevertheless, if you believe in the EV rollout — and that seems like a solid bet — this discount in LAC stock is tempting. As I’ve noted with other lithium mining and production companies, you don’t have to bet on particular brands winning the EV race. Instead, you’re buying into the commodity that every EV automaker needs to “fuel” their products.

And this is where Lithium Americas specifically gets intriguing. The company’s Thacker Pass project is home to the largest known lithium resource in the U.S. As tensions with our internationals rivals, basically China heats up, we have every incentive in the world to secure domestic production of critical resources. Therefore, good things could be ahead for LAC once it gets out of its funk.

Global X Lithium & Battery Tech ETF (LIT)

rows of lithium ion batteries
Source: Lightboxx/ShutterStock.com

I know that this is a discussion about battery stocks, which strongly imply equity units of publicly traded companies. Obviously, Global X Lithium & Battery Tech ETF doesn’t fall into this category but is instead an exchange-traded fund. But the main reason I included LIT stock was that I originally was looking for a way to purchase shares of LG Chem.

LG Chem secured a deal to provide battery cells to Lucid Motors, which will go public via a reverse merger with blank check firm Churchill Capital Corp IV (NYSE:CCIV). Previously, I made the case that Lucid potentially offers the most robust competition to Tesla as they’re both competing in the higher-end EV market. My argument was that for the foreseeable future, only wealthier households can reasonably afford EVs.

Should Lucid outperform expectations, that bodes well for LG Chem. But with no easy way for American investors to buy shares, the next best thing is to purchase the LIT ETF, which has the company among its top holdings. As a bonus, you get exposure to many other intriguing battery stocks.

Energous (WATT)

Image of the Energous Corp. logo on the side of a building
Source: Michael Vi / Shutterstock.com

No matter how advanced technology becomes, batteries eventually run out of charge. Therefore, investing in battery stocks is much more diverse than simply banking on the primary product. Instead, consumers have a host of charging accessories, which focus on either raw speed or convenience.

As a wireless ecosystem that supports at-contact and over-the-air charging, Energous falls under the latter category. Now, I’ll admit that I found the concept of wireless charging redundant. In my mind, I was thinking — how lazy can Americans get? But then, I realized that it’s not just about sheer laziness.

How many times have you left the phone on your desk or drawer, intending to charge it but forgetting to do so? You realize your mistake only after you wake up the next morning. Or what about charging electronic items in the bathroom, such as power toothbrushes or shavers? That can be cumbersome or even dangerous with a wired approach.

The hesitation that I do have regarding WATT stock are its technicals. I’m not a big fan of its posture so you may want to wait for further downside before taking a shot.

Romeo Power (RMO)

Image of a grey electric vehicle plugged in at a charging station.
Source: Videomatic/Shutterstock.com

Despite the substantial progress that EVs have made, the combustion engine continues to be relevant. Primarily, this is due to simple scientific realities: fossil fuels have high energy density. What that translates to is that your typical economy car can travel 30 miles on the highway (maybe more) on a single gallon of gasoline.

To compete against this level of output, EV battery manufacturers must do whatever they can to maximize energy density, which results in longer range and higher performance. And that’s exactly what Romeo Power claims to do. According to its website, Romeo’s EV batteries feature up to 30% higher energy density than competing packs.

Not only that, the company has an innovative thermal management system, which theoretically should make Romeo-powered EVs more reliable, longer lasting and resilient across various environments. While I’m not sure why the U.S. Postal Service eschewed Workhorse (NASDAQ:WKHS) and chose a combustion-based platform for its next-generation mail carriers, reliability under all conditions could have been a factor.

Still, don’t go too crazy with RMO stock. Its technical posture is downright ugly so volatility appears a given.

On the date of publication, Josh Enomoto held a short position on TSLA.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


Article printed from InvestorPlace Media, https://investorplace.com/2021/04/grading-7-biggest-battery-stocks/.

©2021 InvestorPlace Media, LLC