In an increasingly wireless world, batteries are becoming more than just the item you forgot to buy on Christmas Eve. They play an essential role in the world’s move to renewable energy. And as investors, there is no shortage of candidates on a list of best battery stocks.
When you think about battery stocks, your first thought may be electric vehicles (EVs). The relationship between the EV stocks and the best battery stocks is symbiotic. Without EVs, many battery manufacturers lose a key source of revenue. And without an ample supply of lithium-ion batteries, the EV market will be at a standstill.
However, the EV industry is not the only application for battery manufacturers. Batteries will be needed for energy storage and the emerging electric vertical take-off and landing (eVTOL) vehicle industry.
If you’re already investing in this space, you may have your own favorites. However, if you’re relatively new to the space, read up on three of the best battery stocks to start your due diligence.
Tesla (TSLA)
Many investors view Tesla (NASDAQ:TSLA) as more than a car company. In fact, many reasons support including TSLA on a list of the best battery stocks.
First, Tesla is a vertically integrated EV maker that manufactures its own batteries. And those batteries come with a high density that allows them to store more energy in a smaller space. Beyond EVs, Tesla makes batteries for stationary energy storage systems which is becoming the industry standard for storing renewable energy. This has the added benefit of giving Tesla an additional revenue stream.
Tesla was one of the “Magnificent 7” stocks that powered the market higher in 2023. At one point in 2023, TSLA stock was up more than 100%. It’s now “only” posting a 96% one-year gain. And with a forward price-to-earnings (P/E) ratio of over 90x, it’s fair to ask if this is the right time to invest in the stock?
If you’re wondering about that, then consider that the stock has dipped over 14% in the last six months. Also, you should consider that when Tesla stock dropped below $200 a share in 2023, it set the stage for the stock’s current rally. To make a long story short, this may be the pullback you’re looking for.
QuantumScape (QS)
I won’t kid you. QuantumScape (NYSE:QS) is a speculative stock. But if you believe that the Federal Reserve will lower interest rates and, perhaps. lower them aggressively, QS stock may be worth a look.
If you’re not aware QuantumScape has been trying to disrupt the EV battery space with a solid-state battery. This battery would have more density than a lithium-ion battery. And the goal is longer range and charges in less than 30 minutes.
The problem is that the company is not only unprofitable but also pre-revenue. And as interest rates have gone up, the company’s cash burn is becoming more alarming. As Rich Duprey wrote for InvestorPlace, this is a race between getting a production-ready battery and going bankrupt.
Lower interest rates would help, but investors will need to decide on the number of times the Fed will cut rates to feel really comfortable with this investment. Nevertheless, if you have an appetite for speculative stocks, and the patience to build a position as conditions warrant, QS stock may be for you. It may not be one of the best battery stocks to own in 2024, but you’ll be glad you did in 2025.
Amprius Technologies (AMPX)
My third choice for one of the best battery stocks is a small-cap company, Amprius Technologies (NYSE:AMPX). The company manufactures and sells high-density silicon nanowire anode batteries primarily for emerging aviation applications. Those include drones, high-altitude satellites, and, more recently, a manufacturer of eVTOLs.
The company’s battery design solves the issue of swelling which has limited the use of silicon anodes as opposed to traditional graphite anodes. And in December 2023, Amprius opened up a manufacturing facility in Fremont, California. That will increase the company’s production capacity by 10x.
The 15-year-old company just went public in 2022. AMPX stock was down 26% in 2023. But it’s up about 11% in the last month on the news of the factory opening. The company will not be profitable, but it is starting to show strong top line growth. Analysts give the stock a consensus $7.28 price target which would be more than 160% above its price as of the market close on January 9, 2024.
On the date of publication, Chris Markoch 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.