Battery stocks are at a critical juncture. Due to the current oversupply and demand dynamics, core metals lithium, cobalt, and nickel prices have fallen to multi-year lows. Moreover, Goldman Sachs projects a massive downtrend in cobalt, nickel, and lithium carbonate over the next 12 months.
Nevertheless, the long-term outlook for battery stocks remains highly compelling, which makes the current downturn a temporary, manageable setback. Furthermore, according to Inkwood Research, the global battery market is on the brink of a massive breakout, expected to grow at a CAGR of 16.68% from 2022 to 2030, reaching $423.90 billion by 2030. For investors, this scenario presents a strategic entry point into battery stocks, promising robust returns as the market rebounds and continues expanding. With that said, here are three battery stocks that boast excellent long-term potential and ‘strong buy’ consensus analyst ratings.
Battery Stocks: Panasonic (PCRFY)
Panasonic’s (OTCMKTS:PCRFY) pioneering role in developing battery technology makes it a no-brainer pick for niche investors. However, it’s a lot more than just a battery producer. Panasonic’s diverse electronics portfolio spanning multiple sectors helps effectively balance out segment losses.
Moreover, its battery business, while synonymous with its partnership with Tesla (NASDAQ:TSLA), has recently expanded through collaborations with other automotive giants such as Mazda (OTCMKTS:MZDAY) and Toyota (NYSE:TM).
Though the battery market is under duress, Panasonic’s diversity of operations allows the firm to continue pursuing plans for long-term expansion. It aims to boost capacity to 200 GWh by 2031, which implies quadrupling capacity compared to last year.
Additionally, it’s on silicon-based technology, which could enable a 500-mile EV range and 10-minute charge refills. Layer that up with its solid-state battery initiative to power factory robots and drones, and you have a battery stock that boasts tremendous growth potential.
Enovix (ENVX)
Up-and-coming lithium-ion battery producer Enovix (NASDAQ:ENVX) is among a select few in its niche for its fast-paced innovation. It’s looking to pioneer silicon-based lithium-ion battery technology, positioning it for robust sustainability, efficiency, and cost-effectiveness.
Moreover, it’s looking to shift gears from its research-heavy roots and broaden its horizons, targeting multiple sectors, including EVs, wearable tech, and smartphones, with its innovative technology. Some of its recent achievements include an FDA-approved vital sign monitor and the supply of custom batteries for wearables to the U.S. Army.
Additionally, it is set to build a massive $1.2 billion plant in Malaysia to scale its operations. Therefore, with several positives to its name, ENVX stock is a ‘strong buy’ with a 316% upside ahead. Though it trades at a lofty 4.90 times trailing-twelve-month (TTM) its book value, its spectacular long-term growth trajectory positions it for a robust upside ahead.
EnerSys (ENS)
Once a modest player in the flooded lead-acid battery market, EnerSys has become a global titan in energy storage solutions, serving giants in renewables, telecom, and more. With a massive clientele of over 10,000 worldwide, the company is a pioneer in providing comprehensive energy systems, including motive power batteries and specialized battery accessories.
Despite the slowdown in its batteries business, the company boasts incredible profitability metrics, with double-digit free-cash-flow (FCF) and EBITDA (TTM) margins. Its FCF, in particular, is at 11%, beating the sector median and its 5-year average by 71% and 215%, respectively.
Furthermore, EnerSys plans to expand its U.S. manufacturing to Greenville, South Carolina, boosted by a $200 million Inflation Reduction Act incentive. Also, its agreement with the European battery tech player in Verkor should help advance its goal of gaining independence from non-domestic suppliers. Hence, with so much to look forward to, EnerSys is one of the top dependable battery stocks, promising robust growth and innovation.
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.
