Anything related to electric vehicles is bound to do well even beyond the decade. This includes certain metals, auto parts, and EV batteries. Given the positive industry tailwinds, I would look to accumulate very oversold battery stocks and hold for the long-term.
To put things into perspective, the global EV battery market was estimated at $57.4 billion in 2022. It’s expected that the market size will swell to $624 billion by 2035. This would imply multi-fold growth in revenue for some of the best battery companies.
This column focuses on three oversold battery stocks. However, I have talked about an emerging player in the solid-state battery space. Additionally, a lithium miner has been discussed. This will ensure that the portfolio remains diversified within the EV battery segment.
Let’s discuss the reasons to be bullish on these stocks.
Panasonic Holdings (PCRFY)
Panasonic Holdings (OTCMKTS:PCRFY) stock has trended higher by 41% in the last 12 months. I would still count PCRFY stock among the very oversold battery stocks. Given the company’s growth plans, the stock is undervalued at a forward price-earnings ratio of 8.4. Additionally, the stock offers an attractive dividend yield of 1.9%.
From the perspective of expansion, Panasonic Holdings aims to increase its battery capacity to 200 gigawatt-hours by 2031. The company’s last reported capacity was 50-gigawatt hour in March 2022. Therefore, with multi-fold growth in capacity planned, Panasonic is poised for healthy revenue growth.
Besides aggressive expansion, Panasonic is also investing in innovation. This will help the company maintain and potentially increase market share in the coming years. As an example, Panasonic is targeting a 20% jump in battery density by 2030. This will help in making potentially lighter EVs. With these positives, I expect PCRFY stock to deliver multibagger returns.
Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) stock has corrected by 26% in the last 12 months. I believe that the stock is massively oversold considering the asset value and the current market valuation of $858 million.
To put things into perspective, Piedmont has 100% ownership in Tennessee and Caroline project. Both these projects have a combined net present value of $4.5 billion. Additionally, the company’s Quebec and Ghana project have a combined net present value (based on ownership stake) of $1 billion. Clearly, PLL stock is undervalued.
Of course, these projects (except Quebec) will be commercialized in the next few years. However, I believe that PLL stock will trend higher if the project development progress is within the time-line. Additionally, if lithium trends higher, the NPV of the assets will be revised.
I further believe that with Quebec being commercialized, the company’s financial flexibility to invest in other projects will increase in 2024 and beyond.
QuantumScape (QS)
QuantumScape (NYSE:QS) and Solid Power (NASDAQ:SLDP) are two interesting stocks in the solid-state battery space. QS stock has declined by 35% in the last 12 months and I believe that it’s among the oversold battery stocks to buy and hold.
The negative is that solid-state batteries are unlikely to be commercialized anytime soon. However, I believe that this is the time to take the risk. If the company can commercialize solid-state batteries by 2026 or 2027, QS stock will be higher by 10x or 20x from current levels.
It’s also worth noting that the company’s strategic investor and joint venture partner is Volkswagen (OTCMKTS:VWAGY). This adds significant credibility to the company’s research and development efforts. QuantumScape already has or has applied for 300 patents.
For the current year, the company is targeting increased cathode capacity and cell packaging efficiency. Further, for the next two years, the target is to produce low and high-volume B samples.
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.
