The EV sector is a beacon of modern transportation, encompassing not just vehicles but also critical components. Against this backdrop, undervalued battery stocks present a fascinating opportunity for forward-looking investors.
Despite a relatively weak year, the sustained momentum in the EV industry suggests a bright long-term outlook. Hence, the current market correction could be an opportune moment to consider investing in undervalued battery stocks.
Lithium-ion batteries continue to dominate the market, drawing attention to lithium miners and manufacturers. Yet, the sector isn’t just about lithium-ion; it’s also ripe with innovation, notably in solid-state batteries. As we venture further into this dynamic sector, investors have a unique chance to tap into these underappreciated assets.
Panasonic Holdings (PCRFY)
Panasonic Holdings (OTCMKTS:PCRFY) plays a critical role in Tesla’s EV story, but its aspirations go beyond the alliance.
Though the EV pioneer remains a major revenue generator, Panasonic is pushing the envelope in lithium-ion battery technology while exploring solid-state battery innovations.
With an eye on the future, Panasonic is planning to significantly boost its battery capacity to a staggering 200 GWh by 2031. This move is aimed at fueling sales growth and enhancing cash flow, backed by an incredible portfolio of 445 solid-state battery patents.
Panasonic Holdings’ fiscal first quarter results painted a picture of strength in its automotive and energy segments, despite hiccups in lifestyle and industry segments. The automotive battery segment is a major growth engine, especially in the US market, benefiting from ‘Inflation Reduction Act’ subsidies.
Moreover, as it secures new contracts with Subaru and Mazda, Panasonic is broadening its customer base, reducing reliance on Tesla. Hence, a blend of solid EV battery prospects and varied growth initiatives positions it one of the top undervalued battery stocks to watch.
Solid Power (SLDP)
Solid-state lithium batteries are revolutionizing the EV industry with their superior range and safety features.
Solid Power (NASDAQ:SLDP) is arguably at the forefront of this innovative shift, actively developing groundbreaking technology.
A breakthrough for the company includes the successful delivery of a sample battery electrolyte to its partners, showcasing superb results. Solid Power is also on track to deliver sample cells within the year, indicative of its progress and commitment to this transformative technology.
SLDP stock is down roughly 47% year-to-date, offering an excellent entry point. Solid Power’s lean business model, positions it for massive long-term growth as it transitions to broader market applications. For investors looking for opportunities in the EV space, Solid Power represents a promising prospect, poised to make a significant impact as it scales up for mainstream adoption.
QuantumScape (NYSE:QS) is a pioneer in the development of solid-state battery technology, representing a high-risk and high-reward investment opportunity.
With the potential to revolutionize the battery space, QuantumScape’s success in commercializing its technology could result in substantial gains for QS stock. After experiencing a significant correction over the past year, now may be an opportune time for investors to load up on QS stock.
Backed by 12 years of dedicated research and development in solid-state batteries, QuantumScape’s efforts in this domain are striking. It has established six commercial agreements highlighting its credibility and market readiness.
One of its most prominent partnerships is with Volkswagen (OTCMKTS:VWAGY), which has gone on record to validate the performance of QuantumScape’s QS cells.
Looking ahead, the company aims to produce low-volume B samples next year, eventually leading to high-volume production. These strategic moves, coupled with ongoing positive business developments, position QS stock to potentially rebound from its current oversold state.
Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) is another interesting battery play, boasting full ownership of both the Carolina and Tennessee lithium projects, resulting in a combined net present value of $5 billion.
It’s also worth noting Piedmont’s 25% economic interest in a Quebec asset, which has already begun commercial shipments. Consequently, this asset is likely to contribute positively to sales and cash flows, bolstering PLL stock over the long run.
Piedmont green-lit the construction of its Tennessee project with a planned annual capacity of 30,000 tons, to begin production in 2026.
This development further solidifies the company’s position in the lithium market. From an asset valuation standpoint, PLL stock appears undervalued, trading at just 1.1 times its forward book price. This figure is 31% lower than the sector’s median while offering a substantial long-term upside, making Piedmont one of the undervalued battery stocks to buy soon.
Ford (NYSE:F) is steering towards an electrified future, with heavy investments in its EV repertoire.
Moreover, in a significant move to bolster its battery production capabilities, Ford committed to manufacturing nickel cobalt manganese and lithium iron phosphate batteries in the U.S., allocating a massive $17.6 billion. These investments are likely to pay many dividends over the long run as the firm aims to evolve into an even bigger EV player.
Ford faced challenges because of a strike by the United Auto Workers (UAW), which significantly impacted its third-quarter results.
The six-week strike cost Ford an estimated $1.3 billion, and the aftermath of the strike has brought complexities in resuming production, leading to the postponement of $12 billion in planned investments.
Despite these setbacks, there’s a strong belief that Ford’s stock should eventually bounce back. Currently, F stock is trading at a compelling 2.9 times forward cash flow, which offers an attractive quarterly dividend with a 7.61% yield, making it an appealing option for investors seeking both value and income.
Albemarle (NYSE:ALB) is at the forefront of mining and producing critical elements for key industries such as mobility, energy, connectivity, and healthcare.
Its recent financial performance underscores its robust position in the industry. Albemarle reported a 10% increase in net sales, reaching $2.3 billion, alongside a net income of $302.5 million.
The company’s adjusted diluted earnings per share stood at $2.74, with an adjusted EBITDA of $453.3 million. These figures highlight Albemarle’s financial strength and operational efficiency.
Despite softening lithium prices, Albemarle’s sales are projected to grow by about 30% this year, a remarkable achievement.
For investors, Albemarle offers an appealing blend of growth potential and income, with a current yield of 1.38%. Also, analysts at Tipranks label ALB stock as a Moderate Buy, suggesting a potential 70% upside from its current price levels.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) stands out in the lithium mining sphere, boasting some of the most promising deposits in the industry.
The company strategically split its Argentine assets into Lithium Americas Argentina, concentrating on the Thacker Pass lithium project in Nevada.
The buzz surrounding the Thacker Pass project is pretty straightforward, evidenced by its enormous 16.1 million tons of lithium carbonate equivalent reserves and massive $650 million investment from General Motors.
This partnership bolsters Lithium Americas’ position in the EV battery material supply chain, marking a major step in supporting the burgeoning EV industry.
In a major boost for Lithium Americas, the U.S. government is contemplating a record $1 billion loan for the Thacker Pass mine.
This government backing signifies strong support for domestic lithium production, aligning with broader national goals in the EV sector. Moreover, Lithium Americas presents a compelling investment proposition, trading at just 1.5 times its forward book value. Additionally, with LAC stock down 31% in the past month, it presents an excellent buy-the-dip opportunity.
On the date of publication, Muslim Farooque 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