Batteries are the backbone of the technology realm, propelling everything from smartphones to electric vehicles. Evolving from standard alkaline cells of yesteryears, lithium-ion batteries now reign as the powerhouse fueling cutting-edge devices globally. The U.S. alone boasts a gargantuan $44.5 billion in the lithium-ion market, anticipating a robust 13.1% Compound Annual Growth Rate (CAGR) over the next decade.
Embarking on an investment journey in the battery sector reveals its pivotal role across diverse industries. Here are three undervalued battery stocks as we step into the breezy month of June.
The Tesla Spark (TSLA)
Envisioned as the planet’s premier electric vehicle architect in market capitalization and annual sales, Tesla (NASDAQ:TSLA) has faced strife this year, enduring a near 30% decline in stock value amid consumer apprehension tied to rising interest rates and inflation. Nonetheless, undeterred analysts maintain bullish price targets, with a lofty 60% surge projected to a street-high of $296.25.
Debating Tesla’s essence oscillates between valuing it as an automaker or a tech phenomenon. Venturing beyond its upcoming Cybercabs to the Optimus Bot AI, Tesla transcends the automotive realm. Progressing in the battery arena, Tesla unveils promising innovations, such as potential sodium-ion batteries speculated to halve energy storage costs compared to lithium-ion counterparts. Though nascent, this alternative could revolutionize EV affordability, enhancing Tesla’s domination in the market.
Trading at approximately 6.5x sales or 71x forward earnings, Tesla presents a historical stock low. The company is poised to redefine future landscapes, promising substantial growth potential once the tides turn.
The NextEra Surge (NEE)
NextEra Energy (NYSE:NEE) stands as the globe’s prime wind and solar energy producer, commanding the reins in renewable energy storage. Reflecting investor optimism, the stock marginally exceeds its average price target of $74.59, aiming for a 30% ceiling at $102.80.
Leading the U.S. charge, NextEra flaunts the nation’s highest energy storage capacity, with over 180 MW of battery reserves primed to meet dynamic energy demands. Luxuriating in growing five-year revenue Compound Annual Growth Rate (CAGR) of 10%, paralleled with a hefty 57% stock price return, NextEra trades at an attractive 6x sales and 23.5x forward earnings. With a committed dividend growth plan through 2026, investors eye this powerhouse as a robust energy and battery investment.
The Solid Power Revolution (SLDP)
Solid Power (NASDAQ:SLDP), the frontier solid-state battery manufacturer collaborating with global OEM giants, materializes as a prudent investment opportunity at a mere $1.77. Wall Street crafts lofty one-year price targets that beckon a compelling 90% to 200% upsurge.
Boasting revolutionary battery tech, Solid Power captivates the globe’s power brokers, exemplified by partnerships with industry behemoths like Ford (NYSE:F) and an exclusive alliance with South Korea’s SK ON. Recent quarterly revelations showcase promising strides, with year-over-year revenue growth eclipsing $2.2 million.
Despite recent slumps, SLDP trades at a historically subdued 16x sales, resonant of its hyper-growth phase marked by a five-year CAGR of 49%. For investors embracing risk, Solid Power shines as a cost-efficient pure-play solid-state battery stock, ripe for exploration.
On this day, Ian Hartana and Vayun Chugh maintain no direct or indirect holdings in the cited securities. The viewpoints echoed herein belong to the writer, in adherence to the InvestorPlace.com Publishing Standards.
