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While electric vehicles and perhaps electric vertical takeoff and landing (eVTOL) aircraft may represent the future of mobility, it’s quite a challenge to determine which specific manufacturing brand will win out. Not all brilliant companies make it to the finish line. For a possibly more prudent idea, it may be better to consider battery stocks.
In this sector, you’re not trying to wager which team will win the competition. Rather, you’re selling tickets to the big game. Stated differently, it’s a crapshoot to figure out which brand of electric transportation will win. However, all such platforms will need robust power sources. That’s where battery stocks become exceptionally compelling.
Another reason to consider this space is that as competitive pressures rise, some manufacturers may suffer severe market losses. However, the demand for power sources will probably not diminish. If anything, projections call for the sector to grow. With that in mind, below are battery stocks to consider.
Albemarle (ALB)
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Fundamentally, Albemarle (NYSE:ALB) represents one of the most important battery stocks because of its lithium production business. Technically, it’s not a pure-play enterprise in the battery manufacturing space. Still, because it offers the critical component used in the lithium-ion-based power sources that undergird EVs and energy storage systems, ALB stock is an extremely relevant player.
Financially, it has incurred some wobbly quarters. However, in the past year since the first quarter of 2024, Albemarle posted an average earnings per share of $3.05. This haul beat the average analyst target of $2.43 during the same period, leading to an earnings surprise of 28.33%. What’s more, ALB stock appears relatively undervalued, trading at 1.37X trailing-year sales. Between Q1 2023 to Q1 2024, the average price-to-sales ratio stood at 2.39X.
Looking to the end of the year, analysts anticipate a rough outing for Albemarle, projecting a severe decline in earnings and sales. Unfortunately, the slowdown in the EV sector has affected the lithium industry. Nevertheless, a gradual recovery could be in the works starting from fiscal 2025.
Solid Power (SLDP)
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One of the riskier ideas among battery stocks, Solid Power (NASDAQ:SLDP) is one of the growing number of enterprises placing their bets on solid-state batteries (or SSBs). This innovation promises higher energy density, thus allowing for greater capacity. Due to the nature of the design, SSBs should also facilitate faster charging times along with improved safety.
Of course, the problem with SSBs is that so far, the capabilities are more theoretical than practical. Yes, great advancements have been made. However, it’s also fair to point out that making the solution last for multiple charge-discharge cycles is key. Given this difficulty, SLDP trades in low-single-digit territory.
Financially, the company isn’t making a profit though its actual losses per share are below the expected magnitude of red ink (at least in the past four quarters). Also, while the valuation is high at 19.57X trailing-year sales, the market previously accepted a multiple of nearly 27X in the past year.
The decisively good news is that analysts anticipate fiscal 2024 sales to hit $22.6 million, up 29.8% from last year. And sales could fly up to $31.43 million in the next, making SLDP one of the battery stocks to consider.
FREYR Battery (FREY)
Source: T. Schneider / Shutterstock.com
Easily one of the highest-risk ideas among battery stocks, FREYR Battery (NYSE:FREY) aims to produce environmentally friendly battery cells. The company puts a strong focus on sustainability, supporting the push for a reduced-emissions future. Primarily, Freyr serves energy storage systems along with commercial mobility. The latter category includes marine applications and commercial vehicles.
Frankly, investors need to be extremely cautious with FREY stock. In the past 52 weeks, the equity lost 81% of value. That’s not a good performance by any means. So, why bother looking at FREY? From a speculative point of view, shares “only” dipped about 4% on a year-to-date basis. It’s possible, then, that the bulls could be forming a baseline before sending shares higher.
Will that happen? It’s difficult to say. The company isn’t profitable – indeed, it hasn’t generated revenue in the trailing year. That said, it did post $17 million in fiscal 2023. And in fiscal 2024, analysts anticipate Freyr will get back on the horse with revenue of $660,000. In the following year, this print could rise to $3.95 million.
On the date of publication, Josh Enomoto 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.
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