As we ring in a new year, many investors may be thinking about how to reposition their portfolios for 2023. Last year wasn’t necessarily a banner year for many battery stocks. Indeed, many companies have faced challenges in terms of production and metal prices. However, this group merits attention in 2024.
Why?
Well, the long-term secular growth drivers that underpin these companies are still intact. The shift toward electrification remains strong in several key areas of the economy (and in particular in the EV market). In fact, it will continue to drive macro-level growth for many battery stocks. Accordingly, given this sector’s valuation compression, any sort of improvement in investor sentiment and market conditions could lead to big upside for specific names.
Let’s explore three of the best battery stocks to watch in 2024.
Albemarle (ALB)
Albemarle (NYSE:ALB) remains an attractive choice for battery stock investors. After all, it is the leading global lithium producer crucial for EV batteries. Despite recent lithium price declines, industry experts predict a shortage by 2025, favoring Albemarle.
Trading at a low forward price-earnings ratio of 7-times, ALB stock appears set for a sustained rally. With a 1% dividend yield and anticipated healthy growth, Albemarle owns a robust balance sheet. Further, it plans for increased lithium capacity, aiming for 600ktpa by 2027, present potential for stellar revenue and cash flow growth. Additionally, considering potential acquisitions as a growth strategy provides another catalyst for value creation.
While the stock can be volatile, a possible 2024 rebound is expected, contingent on patience and faith in the thriving EV industry. Barring an unforeseen collapse in the EV sector, Albemarle is poised to deliver strong returns for investors this year. Also, expect stellar cash flow and dividend growth not only in 2024 but also in the years to come.
Honeywell (HON)
Honeywell (NASDAQ:HON) stands out in the battery stock realm, known as an industry nerve center. Offering a relatively low-risk option, the company’s recent financials showcase strength. Honeywell’s revenue grew 3% this past quarter to $9.2 billion. This growth occurred amid a record $31.4 billion backlog resulting from a 10% surge in orders.
Beyond robust financials, HON haws diverse energy storage solutions, including lithium-ion, flow, and hydrogen batteries. They span various discharge cycles, contributing to its appeal. This falls under their Performance Materials and Technologies segment, exhibiting sustained long-term growth.
Additionally, the company’s Smart City Accelerator Program is in collaboration with Accelerator for America. The plan underscores Honeywell’s commitment to future urban planning, aiding cities in transformative initiatives. Utilizing the AI-based Internet of Things (IoT) platform City Suite Software, Honeywell integrates crucial infrastructure data for efficient city operations. This platform contributes to Honeywell’s global influence, benefiting 75 smart cities.
NextEra Energy (NEE)
Based in Juno Beach, Florida, NextEra Energy (NYSE:NEE) stands as a global energy giant with over 60 GWh of generating capacity.
In Q3 2023, they added 3,245 MW of renewable energy and storage, including 1,485 MW of solar capacity. Clearly, this showcases robust execution and backlog growth. Florida Power & Light (FPL) aims to add over 20,000 MW of solar capacity by 2032.
NextEra Energy’s hybrid model combines utility stability with renewable energy growth. Amid economic shifts, high bond yields posed challenges for utilities, making NextEra a contrarian choice with a consistent dividend yield above 2.5%.
Anticipated rate cuts in 2024 align with the company’s strategy, and it consistently exceeded earnings expectations. Positioned as a stable income source with substantial upside in the clean energy sector, NextEra Energy stands out in a changing economic landscape.
On the date of publication, Chris MacDonald 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.
