Today’s world is not the world it was even half a decade ago. It seems like the COVID-19 pandemic created new demand for new technology, from factories and manufacturing to the technology people use daily. Today, the United States and China populations have 81.6% and 68.4% cell phone use rates, respectively. And this is just cell phones. Other nations will soon jump on board the electric vehicle wave.
All of this means demand for batteries, whether for cellphones and laptops or the growing adoption of EVs across the globe. With plenty of tailwinds for the rest of the world to catch up to cellphone and other gadget usage rates, these are the three best battery stocks to turn $1,000 into $1 million.
Wheaton Precious Metals (WPM)
Trading at only 76% of its 52-week high, Wheaton Precious Metals (NYSE:WPM) gives you Wall Street’s definition of a bear market, a 20% or more decline from recent highs. This company focuses on cobalt production and distribution, one of the primary commodities of battery production.
Management has released some of the latest outlooks expected from the business in the coming years. From today, projecting forward five years, management expects 40% growth across the board. Several assets are set to begin operations by the end of 2024 to add significantly to the top and bottom lines.
In these projections, management forecasts a lower price per pound of cobalt. This could be considered conservative, especially with demand already heating up.
It is no wonder that markets are willing to pay a 30.6x P/E ratio for the stock today, where the industry average is only 10.7x. The saying “It must be expensive for a reason” applies here; now you know the reason: growth.
Glencore International (GLNCY)
Seeing lower cobalt prices in the open market may have caused Glencore International (OTCMKTS:GLNCY) to trade in a bear market similar to its competitor Wheaton, this one selling at 77% of its 52-week high prices. However, this is only another pillar for you to lean on when considering your potential investment.
Similarly, Glencore management has pointed to lower cobalt prices in the open market for 2024, so this is an industry-wide rather than a company-specific issue. When you find these highly cyclical situations, the momentum seen in the next bull run is the sort of environment that can compound your wealth.
Knowing what you know now, it should be no surprise that analysts expect EPS growth of only 9.5% to fall in line with the industry average of 9.5%. However, you already know that this may be the conservative side of projections undermining the potential rise and boom of demand; you could assume that this is the bottoming of the cycle.
If overpaying for a stock like Wheaton bothers you, even for a good thing, then you can rest assured that in the 11.6x P/E that Glencore trades for today, there is a massive 62.3% discount to its competitor.
BHP Billiton (BHP)
While primarily focusing on copper and iron ore, this company has a small but quickly growing exposure to the cobalt segment. Analysts became bearish on BHP Billiton (NYSE:BHP) by projecting a net decrease in EPS of 2.7% over the next twelve months.
Understanding that the commodity supercycle could soon be sparked by FED interest rate cuts incentivizing business activity and consumption, you know that BHP is the contrarian investment of the space, and often, being a contrarian is the only way to ensure a multi-bagger investment.
Institutional investors like TD Asset Management have increased their positions in BHP by as much as 15.1% in the last quarter, calling attention to contrarianism.
Price action and size come to the aid of the story as well; trading at 83% of its 52-week high, along with its massive $152.8 billion market cap, could be factors to attract many other large investors into the name.
As of this writing, Gabriel Osorio-Mazzilli did not hold (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.
