For high-growth battery stocks tied to the burgeoning electric vehicle industry, 2025 will be a key milestone. That’s when plug-in vehicles will make up 23% of new passenger vehicle sales globally in 2025. In 2021, this metric came in just under 10%. Thus, forward-thinking market participants should consider investing in battery companies.
Another reason to look to 2025 is that according to Statista, the global EV market may command a valuation of $567 billion. By this point, not only will more consumers be interested in making the transition to electrification, the overall competition should be significantly consolidated. Put another way, several months from now, the contenders will separate from the pretenders. And that should be huge for battery stocks to buy.
Basically, by that consolidation point, consumers should have more confidence about which brands will make it. Having got that key concern out of the way, the money really start flowing in. With that, these may be the sector players to consider before they become skyrocketing battery stocks.
One of the top consumer electronics companies in Japan, Panasonic (OTCMKTS:PCRFY) garners much attention among high-growth battery stocks to buy thanks to its longstanding relationship with Tesla (NASDAQ:TSLA). With Panasonic planning to boost battery output at Tesla’s Nevada Gigafactory by 10%, the partnership continues to be viable.
On a financial note, Panasonic could admittedly use some work. For instance, its Piotroski F-Score sits at 5 out of 9, indicating very modest operational efficiency. Also, its Altman Z-Score of 2.34 sits in the gray zone regarding fiscal stability. Having said that, PCRFY makes a solid case for investing in battery companies that happen to be discounted.
Right now, the market prices shares at a forward multiple of 12.41. As a discount to projected earnings, Panasonic ranks better than 75.32% of the competition. Also, PCRFY trades at 0.48 times trailing sales. In contrast, the sector median stands at a much loftier 1.37 times.
A multinational industrial conglomerate, Honeywell (NASDAQ:HON) primarily operates in four business categories: aerospace, building technologies, performance materials and technologies. Known for a wide variety of both mundane and innovative products, Honeywell offers significant relevancies for the EV market. Therefore, it’s one of the battery stocks to consider.
Specifically, Honeywell developed a new suite of sensor offerings for enhanced safety in EV batteries, per its website. In addition, the applied sciences giant developed energy storage systems that deliver the best combination of performance and reliability. Given that range anxiety still represents a major impediment to EV integration, Honeywell’s innovations may go a long way.
Regarding its financials, Honeywell could use some improvements in the operations and growth metrics. At the same time, it’s difficult to overlook that the company is consistently profitable. Also, it commands a trailing-year net margin of 14.54%, above 83.74% of its peers. Thus, it’s one of the battery stocks to buy for generally conservative investors.
To be fair, Albemarle (NYSE:ALB) doesn’t exactly qualify as a direct player among high-growth battery stocks to buy. First, it’s not structured as a battery company per say but rather a specialty chemicals manufacturing firm. Second, ALB isn’t exactly considered high growth. Since the start of the year, shares gained nearly 11%, good but not brilliant by any means.
Nevertheless, Albemarle deserves respect and consideration because it’s the largest provider of lithium for EV batteries in the world, per its public profile. Fundamentally, as the EV market continues to grow globally and take significant market share, Albemarle will likely rise in demand. Therefore, if you’re interested in investing in battery companies, you ignore ALB at the risk of absorbing an opportunity cost.
Financially, investors will appreciate its strong operational stats. Its three-year revenue growth rate on a per-share basis lands at 22.6%, above 80.44% of its peers. Also, its EBITDA growth rate during the same period impresses at 45.7%.
General Motors (GM)
As with Albemarle above, General Motors (NYSE:GM) doesn’t qualify as a pure candidate for high-growth battery stocks to buy. However, if you really believe in the EV narrative, you can’t ignore General Motors. Of course, the reason centers on its aggressive push into electrification. Notably, GM if focused on developing Ultium, an EV platform built on a flexible battery architecture.
Thanks to its flexibility, the company could theoretically develop EVs across different vehicle types, enabling management to respond quickly. For instance, if consumers lean heavily toward SUVs or pickup trucks, GM can shift more production capacity to the vehicle types in demand. As well, I appreciate that GM features multiple iconic models that it can electrify.
Looking at the financials, GM like other major automakers doesn’t carry the most sterling metrics. However, shares appear grossly undervalued. Right now, the market prices GM stock at a forward multiple of 5.87. As a discount to projected earnings, the automaker ranks better than 88.37% of sector rivals.
A Chinese conglomerate manufacturing company, BYD (OTMCKTS:BYDDY) also doesn’t represent a direct player among high-growth battery stocks to buy. However, because of its holistic approach to electric mobility, including the manufacturing of EVs, e-bicycles, solar panels and rechargeable batteries, it’s a name you need to keep on your radar. Also, it’s a strong performer this year, gaining over 30% since the January opener.
According to its website, BYD is the world’s leading producer of rechargeable batteries, including lithium-ion batteries. Further, BYD owns the complete supply chain layout from mineral battery cells to battery packs. With competition in the global EV space only heating up, the Chinese juggernaut will likely be a force to be reckoned with. Over the past five years, BYDDY gained just over 443% of equity value.
As you might suspect, the company is a growth machine, featuring a three-year revenue growth rate of 54.4%. Also, its EBITDA growth rate during the same period clocks in at 44.4%. If you’re looking for skyrocketing battery stocks, BYD makes a compelling argument for itself.
Moving over to the riskiest side of battery stocks to buy, Microvast (NASDAQ:MVST) is a battery technology firm located in Stafford, Texas. Per its public profile, Microvast designs, develops and manufactures battery components and systems primarily for electric commercial vehicles and utility-scale energy storage systems. Since the Jan. opener, MVST soared nearly 34%.
At the same time, in the trailing one-year period, MVST gave up almost 19% of equity value. Therefore, prospective investors must be prepared for volatility. Still, the attraction for investors centers on the company’s vertically integrated business structure. Therefore, Microvast is able to address the entire value chain of the battery manufacturing process, making it indelible to its enterprise-level clients.
However, aside form the company’s three-year revenue growth rate of 38.4% (which beats out 94.06% of its peers), MVST presents an awfully risky proposition. If you’re interested in investing in battery companies with significant upside potential, MVST is worth a look. Otherwise, non-market gamblers should probably consider the five entities above.
FREYR Battery (FREY)
Another risky candidate for high-growth battery stocks, Norway-based FREYR Battery (NYSE:FREY) aims to become one of Europe’s largest battery cell suppliers. Per its corporate profile, Freyr will supply safe, high energy density and cost competitive clean battery cells to the rapidly growing global markets for electric vehicles, energy storage and marine applications. Since the beginning of this year, FREY gained over 5% of equity value.
Over the trailing one-year period, FREY moved up over 14%. Susceptible to both extreme peaks and valleys, FREY is best left for speculators. True, the company features a cash-to-debt ratio of 17.91 times, ranked better than 81% of enterprises listed in the industrial products segment. However, it’s a pre-revenue organization, which may arouse skepticism.
Interestingly, though, FREY just might qualify (eventually) as one of the skyrocketing battery stocks. According to TipRanks, Wall Street analysts peg shares as a unanimous strong buy. Overall, their average price target lands at $13.50, implying over 51% upside potential.
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.