3 Battery Stocks to Buy to Tap Into a Hidden Bull Market


  • The high demand for batteries could cause a hidden bull market, and the following battery stocks to buy are set to gain the most.
  • Tesla (TSLA): The company is a leading producer of the batteries that power its electric sedans and SUVs.
  • QuantumScape (QS): This battery company counts Bill Gates and Volkswagen (VWAGY) among its largest investors.
  • Albemarle (ALB): The largest producer of lithium has seen its stock gain 12% this year in an otherwise declining market.
battery stocks to buy - 3 Battery Stocks to Buy to Tap Into a Hidden Bull Market

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It is best not to sleep these battery stocks to buy as many automakers are announcing their intention to completely electrify vehicles by 2035. Thus, the demand for batteries that power electric vehicles (or EVs) will only intensify in the coming years.

For example, it is projected that the market for electric vehicle batteries will grow from $21.95 billion in 2020 to $154.90 billion by 2028, at a compound annual growth rate (or CAGR) of 28.1%. Moreover, EV makers are working overtime to solve two of the biggest problems associated with batteries that power their cars — the distance that electric vehicles can travel with a single battery charge and the time needed to recharge depleted batteries. 

Whether working in-house or through a team of external scientists and engineers, automakers are heavily focused on improving EV batteries. Thus, this is leading to a rapidly developing bull market among battery stocks. 

Here are three battery stocks to buy now to tap into a hidden bull market.

TSLA Tesla $287.71
QS QuantumScape $9.37
ALB Albemarle $274.04

Tesla (TSLA)

Tesla (TSLA stock) Motors store in Piazza Gae Aulenti square in Milan, Italy
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Tesla (NASDAQ:TSLA) is, first and foremost, an electric vehicle maker. But it is also a massive manufacturer of batteries used to power its electric sedans and SUVs. The Texas-based company has a target this year to produce enough batteries to power about 1.3 million EVs. While doing so, Tesla is also advancing and improving battery technology. Tesla’s newest 4680 lithium-ion batteries have five times more energy than its previous 2170 battery cells. Moreover, Tesla engineers produce the company’s batteries in-house.

For Tesla, there is a financial imperative to produce more cost-effective batteries. More efficient batteries will bring down costs and enable more consumers to afford a Tesla vehicle, thus boosting sales.

Therefore, Tesla’s CEO Elon Musk has singled out the development of more powerful and cost-effective batteries as one of the biggest goals for the automaker and a key to helping it keep its competitive edge.

After a 3-for-1 stock split in August, investors can now buy TSLA stock at $287.71 a share, down 30% on the year.

QuantumScape (QS)

The entrance to QuantumScape Headquarters QS stock
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Down 61% this year and currently trading at just $9.37 a share, there appears to be much skepticism about QuantumScape (NYSE:QS). However, the company that employs about 400 people and makes solid-state lithium-ion batteries for EVs has a couple of big investors in its corner. QuantumScape is backed by Microsoft’s (NASDAQ:MSFT) co-founder Bill Gates and the German auto giant Volkswagen (OTCMKTS:VWAGY). Volkswagen has invested more than $300 million in QuantumScape and is the company’s largest shareholder.

Founded in 2010 by three professors at Stanford University, QuantumScape aims to increase the driving distance of EV batteries while at the same time reducing the time it takes to recharge them. Earlier this year, the company announced that it is entering the production of a solid-state battery capable of giving electric vehicles a driving range of 650 km on a single battery charge. The new battery will also lower the time to fully recharge the battery to just 15 minutes. QS stock has been down 8% since it went public in August 2020.

Albemarle (ALB)

Albemarle (ALB) logo on a mobile phone screen
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Albemarle Corp. (NYSE:ALB) is a different type of electric vehicle battery company. Rather than making the batteries themselves, Albemarle is the largest provider of lithium for EV batteries. Lithium is an essential ingredient in electric vehicle batteries. Thus, Albemarle is vital to battery manufacturers and automakers worldwide. This also explains why ALB stock is up 12% this year while the rest of the market has declined, making it one of the most profitable battery stocks to buy.

Moreover, ALB stock has gotten a boost not only from solid demand but also from the fact that the price of lithium has increased 220% this year. The price increase of lithium has bolstered Albemarle’s finances even as macroeconomic headwinds intensify and stock markets are in turmoil. The good news for investors is that demand for lithium is only expected to increase as more automakers switch to battery-powered vehicles and move away from gasoline-fueled engines.

On the date of publication, Joel Baglole did not have (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.

Article printed from InvestorPlace Media, https://investorplace.com/2022/09/3-battery-stocks-to-buy-to-tap-into-a-hidden-bull-market/.

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