Three battery companies offer massive potential while lithium prices hit basement lows
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Battery stocks reflect the gradually slowing market for electric vehicles (EVs) over the past few years. Many battery manufacturers and producers of battery technology rely on EV production as their main source of demand and revenue.
Given the risk and poor performance of EV stocks late last year, many battery stocks went with them. While some investors may be hesitant to board what they believe is a sinking ship, this dip in price has placed these three excellent stocks in the painfully undervalued category, with great potential to bounce back.
Let’s explore the plans for improvement and the platforms created by increased EV production for these battery stocks this year.
Albemarle (ALB)
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Charlotte, N.C.-based Albemarle (NYSE:ALB) is one of the top lithium producers in the world. And now, its price is almost at a record low. Specifically, the price basement is largely due to recent drops in the price of lithium.
Despite this hurdle, Albemarle has continued to produce solid revenue growth, with 31.38% for 2023 and total net sales of $9.6 billion. To continue this growth and keep up with nonstop lithium demand, ALB is starting international expansion projects.
Most notable are the lithium conversion facilities that Albemarle has been constructing throughout China over the last few years. The Meishan facility alone is able to produce enough lithium to power over 1.5 million EVs per year. The expansion project Albemarle has started in Meishan is also set to wrap up construction, promising even bigger output.
To give confidence to investors, these projects and future ones aren’t coming out of Ablemarle’s pockets alone. Last year, the company received a $90M grant from the U.S. Department of Defense (DOD) to further boost its lithium production.
With a record-low price and an endless demand for lithium, Ablemarle is a fantastic buy for investors who believe in the EV industry’s future growth.
MicroVast (MVST)
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MicroVast (NASDAQ:MVST) is a relatively new player in the lithium-ion battery solution design industry. In 2021, the company received over $800 million in gross cash through a merger with Tuscan Holdings Corp. to accelerate growth and firmly establish itself in the battery industry.
MVST has never feared heavy investments to boost its production market reach. As a result, it has shown successful growth and profit. In 2023, despite a hefty investment of $504M for a new separator facility in Kentucky, the company still boasted a vast 107.5% boost in revenue the following quarter.
Although MicroVast isn’t immune to the slowly decreasing price of lithium, its current stock price of around $.70 is an excellent bargain, considering its potential. Considering the undoubtable continued growth of the EV market, a large battery producer and designer like MicroVast will certainly be in demand.
Solid Power (SLDP)
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Our final stock, Solid Power (NASDAQ:SLDP), specializes in solid-state batteries and seeks to provide it’s designs and technology to other battery manufacturers. Solid Power’s star player is its sulfide-based solid electrolytes, a more effective alternative to traditional liquid-based electrolytes.
These electrolytes are the next step up for batteries. And, Solid Power intends to lead the charge, increasing production to be able to power 800,000 EVs by 2028. After receiving a generous base-investment from Ford and BMW in 2021, SLDP has an established roster of customers with deep pockets.
All that’s left is for Solid Power to deliver the production numbers they have promised. While revenue fell short of expectations last year due to the upscale of operations, EPS surpassed estimates by 3.6%.
There’s little doubt SLDP will show returns with the higher output and selling of its solid-state technology to other producers. Once more sustainable and cheaper batteries hit the mainstream, take advantage of this stock’s current valuation.
On the date of publication, Joel Lim 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.
