Despite an EV market slowdown, long-term forecasts for battery stocks to buy remain bullish
Betting on battery stocks to buy might not be the sharpest play in today’s market. Much of it is due to the slowdown in EV markets, arguably the strongest catalyst for the battery sphere. With that impetus tapering off, many of the top battery stocks to buy are trading at deep discounts.
Surely, the near-term upside in battery stocks is slim, bearing in mind the headwinds in the EV market. However, I doubt the current softness will impact the long-term bull case for battery stocks and the green energy space. The world is shifting towards a sustainable future, and batteries are a huge part of that. According to Mordor Intelligence forecasts, the market will soar to $171.8 billion by 2029, at an impressive 23.5% CAGR from 2024. Hence, without further ado, let’s look at long-term battery stock plays for a more forward-looking portfolio.
Battery Stocks to Buy: Albemarle (ALB)
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Albemarle (NYSE:ALB) is one of the forerunners in the battery space involved in the production of lithium compounds, critical components in EV batteries. However, for reasons discussed earlier, ALB stock has fallen out of favor with investors and then some. Its stock tanked almost 38% last year and is down 12.4% year-to-date (YTD). Consequently, it finds itself trailing its 52-week highs by nearly 50%.
Amid falling lithium prices in recent quarters, ALB’s revenues and profits have taken a monumental beating. Revenue growth has been in the red in the past couple of quarters, with more than a 47% dip in its most recent one.
Nevertheless, its management remains bullish on lithium demand over the long-term, driven by the transition to electric mobility and the growing need for energy storage solutions. Meanwhile, ALB stock investors can continue benefitting from its solid dividend, which has grown for almost 30 consecutive years. Moreover, its management recently declared a new quarterly dividend of 40 cents, set to be distributed on July 1.
Lithium Americas (LAC)
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Lithium Americas (NYSE:LAC) has been one of the more talked-about names in the lithium mining space in the past year or so. It’s the powerhouse behind the much-touted Thacker Pass Project, poised for a massive splash in the lithium space. It used to be a much larger entity, but after spinning off its Argentinian operation, it’s now squarely focused on commercializing the Thacker Pass Project.
Work is in full swing at the Thacker Pass, which, at complete capacity, could produce enough lithium to power 800,000 EVs. Moreover, it boasts an estimated net present value (NPV) of a whopping $2.6 billion after taxes, making it a massive cash cow for LAC.
The mine is expected to produce 40,000 tons of lithium carbonate in its first phase and double-digit output in the second phase. The project received a stellar boost with a sizeable $2.26 billion Department of Energy loan, and General Motors’ (NYSE:GM) $650 million investment has fully funded the first phase. Additionally, it recently raised another $275 million, pointing to healthy confidence in the firm’s potential.
Panasonic Holdings (PCRHY)
Source: Panasonic
Japanese electronics giant Panasonic Holdings (OTCMKTS:PCRHY) has seen its stock flounder in line with the fluctuating EV space. However, the savvy investor may see the potential for a robust upside following recent geopolitical events. Particularly, the recent hike in U.S. tariffs on Chinese lithium-ion batteries, from 7.5% to 25%, could be a major tailwind for Panasonic as it ramps up its U.S. manufacturing capabilities. Moreover, it opened up a new facility in Kansas while operating its existing Nevada Giga 1 facility, reducing dependence on Chinese imports.
Furthermore, Panasonic has been focusing on becoming a leaner and more focused operation. A big part of that is its switch to an unsponsored ADR, shielding it from the regulations and costs associated with sponsoring ADRs.
Moreover, the firm has been looking to expand its partnerships beyond its famed Tesla (NASDAQ:TSLA) alliance. Over the past couple of years, it inked deals with Subaru, Mazda, and Lucid Group (NASDAQ:LCID) in diversifying its revenue base. Hence, these developments make it an intriguing pick for those looking for battery stocks to buy.
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.
