Investors may argue that battery stocks are some of the most boring investment ideas. But with global leaders fighting for millions to go green, batteries play an essential role with renewable energy.
“Batteries are crucial in the global economy transition with their ability to maintain a balance between supply and demand within the power system,” according to Know How. “In the use of renewable energy sources, batteries enable utility providers to gather extra electricity and store it for periods when the solar panels and wind turbines are not working the most efficiently (the sun is not shining or wind is not blowing).”
And in the U.S., the Biden Administration announced that up to $3.5 billion from the Bipartisan Infrastructure Law would be used to boost production of advanced batteries and battery materials. With demand only expected to grow with the green energy boom, investors may want to pay close attention to battery stocks.
QuantumScape Corp. (QS)
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Keep an eye on oversold shares of QuantumScape (NYSE:QS). After diving to $5.50, the stock is just starting to pivot higher, last trading at $6.22.
In addition, analysts at Baird just raised their price target to $8 from $5, with a neutral rating. The firm noted that new CEO Dr. Siva Sivaram will be instrumental in helping the company achieve commercial scale production. Also, the company’s solid-state batteries could help cool electric vehicle (EV) range anxiety and help kickstart interest in EV sales.
The company is already starting to ship its initial trial version of a prototype solid-state battery to customers, which was a major goal for QS.
“The Alpha-2 shipments represent an important milestone on our path to commercialization,” said Dr. Siva Sivaram, president and CEO of QuantumScape. “We are very encouraged by the initial Alpha-2 performance results and excited about the first QSE-5 cells we expect to manufacture later this year.”
Albemarle (ALB)
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We can also look at Albemarle (NYSE:ALB), which is showing big signs of life again.
After dipping to a low of $110, the lithium giant is back to $128, and could refill its bearish gap around $140, near term. Additionally, Oppenheimer analyst Colin Rusch now has an outperform rating on the ALB stock with a $188 price target. Also, ALB is still inexpensive at 9x earnings, 1.61x book, and yields about 1.34% at the moment.
We also have to consider that lithium prices have fallen too much to cover the cost of supply needed for EVs, says The Wall Street Journal.
“A recovery isn’t yet in sight, but one will have to come eventually. Lithium prices are now too low to justify a chunk of today’s ore extraction in Australia and China, let alone investment in new production necessary to feed expected growth in the EV market. That is setting up the conditions for a shortage and rally,” they added.
iShares Global Clean Energy ETF (ICLN)
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Or, if you want to diversify at low cost, there’s the iShares Global Clean Energy ETF (NASDAQ:ICLN).
With an expense ratio of 0.41%, the ETF invests in more than just battery stocks. It also offers exposure to companies that produce energy from solar, wind, and other renewable sources. So, a little bit of everything. Some of its 102 holdings include First Solar (NASDAQ:FSLR), Enphase Energy (NASDAQ:ENPH), SolarEdge (NASDAQ:SEDG), Sunrun (NASDAQ:RUN), Bloom Energy (NYSE:BE), and SunPower(NASDAQ:SPWR).
At the moment, the ICLN ETF trades at just $14 a share. From here, with growing green energy demand, and potential rate cuts from the Federal Reserve, I’d like to see the ICLN ETF climb back to $18 over the rest of the year. Moreover, the Biden Administration just committed about $6 billion toward cutting emissions from some of the nation’s top sectors.
“Together, the projects are expected to prevent more than 14 million metric tons of carbon dioxide emissions annually — equal to the savings of getting 3 million gasoline-powered cars off the roads for a year,” reported TheHill.com.
All of this should be beneficial for many of the ICLN ETF’s holdings.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
