Battery stocks offer a legitimate path toward strong future returns. Time will tell whether the particular stocks listed below contribute to those riches. But given that each trades at or around the $10 level, significant upside potential is evident. The EV sector is booming, and is seeing mass adoption not only domestically, but around the world.
The U.S. surpassed that tipping point during the summer of 2022. So, it’s safe to say that EVs are here to stay. A clear path for future growth exists for stocks in this sector. Identifying the best publicly-traded firms and investing capital is all that is necessary. Of course, that’s probably easier said than done, given the myriad options to choose from.
That said, the firms below are among the clearest potential winners at this point. That is, in my humble opinion, at least.
QuantumScape (QS)
QuantumScape (NYSE:QS) is a solid-state battery technology company. Currently, QS stock isn’t particularly favored by Wall Street or Main Street at the moment. Given that more than 20% of its float is shorted, it’s fair to say many expect this battery stock to decline.
That’s nothing new for QuantumScape, which was targeted by a short seller firm back in 2021. Since then, QS stock has endured a slow fizzle lower.
The good news is that shares of QS stock are quite inexpensive now. However, QuantumScape has continued to iterate upward toward future solid-state battery commercialization. Thus, I think the initial hate was essentially unfounded.
Last year, the company began delivering 24-layer prototypes to automotive manufacturers. Now comes the wait. Those manufacturers will independently test QuantumScape’s batteries in successive stages.
QuantumScape has a good chance of commercializing solid-state EV batteries. That technology, whether brought to market by QuantumScape or another company, is going to be a game-changer. So, QS stock remains a solid bet for investors looking for undervalued growth stocks right now.
FREYR Battery (FREY)
FREYR Battery (NYSE:FREY) stock is expected to provide strong returns for investors over the coming 3-6 months.
Strong institutional interest around this battery stock is one of the key reasons to hold this view. Indeed, analysts at Morgan Stanley (NYSE:MS) recently upgraded FREY stock, citing the company’s surpassing of “material milestones” as a reason to buy this stock. Those milestones included the assembly, charging and discharging of its first battery cells at its Norway manufacturing plant.
The company also anticipates sending sample cells to customers within the next 3-6 months. That news has spurred the aforementioned analysts to state that the next 3-6 months could be critical for investors looking to capitalize on the value FREYR provides. The notion is that additional funding for FREYR Battery’s Norway and U.S. manufacturing plants could be forthcoming during this time frame.
Freyr Battery refers to its business as ‘clean battery solutions’. It is producing current-generation lithium-ion batteries fueled by hydroelectric and wind energy. FREYR’s Giga America and Giga Arctic manufacturing bases are surely receiving increased attention and scrutiny following the positive news. It all suggests the coming weeks will be strong for the company.
Solid Power (SLDP)
Solid Power (NASDAQ:SLDP) is a company in direct competition with QuantumScape, another solid-state battery producer highlighted above. Both firms design solid-state battery technology and both went public via SPAC mergers. Additionally, both companies are vying to commercialize solid-state batteries, and take the lion’s share of this market in this nascent space.
Solid-state batteries are safer and have higher energy density than current-generation lithium-ion EV batteries. The combination of greater range and safety promises to alleviate several of the current arguments against wider EV adoption. That should open up a much wider market for EVs overall. The conclusion is obvious – if Solid Power gets there first, a giant reward will be provided to investors who got in early.
The firm remains on track with its development timeline, anticipating automotive qualification later this year. Electrolyte production scaling and cell performance are both improving iteratively. These are positive factors for investors to consider.
Now, from a fundamentals perspective, Solid Power presents real risks. The firm loses much more than it makes in revenue on an annual basis. It’s all about getting on board early as commercialization milestones approach. At less than $3 per share, the upside with SLDP stock remains very appealing.
On the date of publication, Alex Sirois 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.
