Battery stocks have not been among the best performers. As a matter of fact, several battery stocks have trended lower. However, some appear to be incredibly undervalued. Even better, the electric vehicle (EV) battery market was valued at $50.2 billion in 2021. It’s expected that the market size will swell to $225.55 billion by 2030. This would imply growth at a compound annual growth rate (CAGR) of 18.9%, creating opportunities for these top undervalued battery stocks.
Panasonic (PCRFY)
Panasonic (OTCMKTS:PCRFY) is my top pick among undervalued battery stocks. While the stock has been trending lower, it does appear attractive with a forward price-to-earnings (P/E) ratio of 10. Plus, PCRFY offers an attractive dividend yield of 1.96%. That being said, I wouldn’t be surprised if PRFY delivers 100% returns within the next 12 months.
Even better, the company is emphasizing the need to build another four factories to achieve a “sharp boost” in battery capacity by 2031. This should translate into healthy revenue growth and cash flow upside. It’s also worth noting that Panasonic is an innovator. This is likely to ensure that the company maintains or boosts its market share in the coming years. The company is targeting a 20% jump in battery density by 2030.
Solid Power (SLDP)
When it comes to solid-state batteries, Solid Power (NASDAQ:SLDP) is my first choice. It’s worth noting that SLDP stock plunged by almost 70% in the last 12 months. However, I remain optimistic, believing it’s now severely undervalued. While we’re not likely to see solid-state battery commercialization anytime soon, further progress toward that goal will be significant for SLDP.
Helping, Solid Power is scheduled to deliver EV cells for validation testing to automotive partners in 2023. Those companies include Ford (NYSE:F) and BMW (OTCMKTS:BMWYY). If the tests deliver encouraging results, SLDP stock could see higher highs.
Ford Motor (F)
Ford Motor is undervalued and poised for a breakout. In fact, with a strong yield of 5.07% and an attractive forward P/E ratio of 5.6, I’d like to see the stock double over the next year, or so. Helping, the company has embarked on an aggressive transformation plan toward electric vehicles. With regards to batteries, Ford is making some big investments. In May 2021, for example, Ford and SK Innovation announced a joint venture “to produce approximately 60 GWh annually in traction battery cells and array modules.”
In Feb., the company committed to building nickel cobalt manganese and lithium iron phosphate batteries in the U.S. With this announcement, Ford (along with JVs) committed total investments of $17.6 billion towards battery production.
Albemarle (ALB)
Albemarle (NYSE:ALB) is another severely undervalued battery stock to consider. With a forward P/E ratio of 6.9, ALB stock looks poised to double in the next few quarters. Additionally, I believe that the stock is among the attractive dividend growth stocks to buy and hold.
Even better, Albemarle reported revenue growth of 60% on a year-on-year basis for Q2 2023. Even with a correction in lithium prices, the company expects revenue growth of 40% to 55% for the year. Further, with operating cash flow guidance of $1.5 billion, the company looks attractive. Another point to note is that Albemarle has guided lithium sales volume growth at a CAGR of 20% to 30% through 2027.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) stock has corrected by 43% in the last 12 months. I believe that this correction is a golden accumulation opportunity for multi-bagger returns. In my view, LAC stock is poised for 5x returns in the next five years.
This view is underscored by the point that the company has a prized asset in North America. The Thacker Pass project has an after-tax net present value of $5.7 billion. Further, the asset has a mine life of 40 years with an average annual EBITDA likely at $1.1 billion. Clearly, the asset is a cash flow machine once production commences.
Lithium Americas has also decided on a strategic split of the company into two. Lithium Argentina will be created to focus on assets in Argentina. This split is likely to translate into value unlocking and is a potential stock upside catalyst.
QuantumScape (QS)
QuantumScape (NYSE:QS) is another attractive company in the solid-state battery space. While the stock has trended lower – thanks to a lack of solid-state battery commercialization – the stock appears undervalued. In terms of business progress, QuantumScape has shipped “high cathode-loading unit cells” to multiple automotive partners in Q2 2023. The company believes that it’s an important step towards first product commercialization.
The company is also targeting 15-minute fast charging from 10% to 80% in its first commercial product. Research and development on that front has been encouraging. Further, the company’s AO prototype cell has passed the safety test by a leading automotive customer. The key point is that there are several positive business developments. These are likely triggers for QS stock to surge higher in the coming quarters.
FREYR Battery (FREY)
FREYR Battery (NYSE:FREY) is another interest name among undervalued battery stocks to buy. FREY stock has been in a downtrend in the last 12 months and looks attractive at $6.32 a share. The company, which is involved in the designing and manufacturing of high-density lithium-ion batteries, could have a game-changer on its hands with its Giga America project.
The first phase of the project will have a capacity of 2.5 GWh. Then, once the second phase is completed by 2026, capacity will increase to 38 GWh. All could position FREYR for robust growth in the next five years. From a financial perspective, FREYR ended Q2 2023 with cash and equivalents of $334 million.
On the date of publication, Faisal Humayun 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.
