Investors should pay special attention to battery stocks as 2023 winds down. Shares of companies that produce battery cells, batteries themselves, and the metals used therein have had a tough run of it lately. It’s absolutely fair to characterize their current performance as being in the doldrums.
In other words, there’s a contrarian opportunity afoot. Lithium prices have tanked but they will rebound at some point because the electric vehicle industry is here to stay. Further, The worst of recent market cyclicality is likely behind us. The Federal Reserve is going to cut rates three times or more in 2024. Those factors will combine to make battery stocks again attractive and promise to increase share prices in the process.
Solid Power (SLDP)
Glass half full type investors should really consider Solid Power (NASDAQ:SLDP) stock in 2024. Solid state batteries are going to continue to be a focal point in the electric vehicle industry. Human Innovation is what it is and it is focused on developing current battery technology to a new level. In other words, someone is going to commercialize solid state batteries in the next few years and Solid Power very well may be that firm.
The company should be on your radio radar in 2024 for a few prominent reasons. number one, Solid Power continues to do quite well from a fundamental perspective. The company is growing rapidly and saw its revenues double in the first nine months of 2023, reaching $15.06 million. Revenue growth was even a little bit faster in the most recent quarter which suggests that Solid Power continues to see strong demand.
I would consider that the biggest knock against the company is that it continues to produce losses. During the first nine months of 2023 the company produced a net loss of $46.5 million. However, at the same time, the company has liquidity reserves in excess of $420 million meaning that it has a very long runway ahead of it. Further, with overall economic conditions easing, the company will have a chance to potentially refinance some of its debt cheaply in 2024. Perhaps most importantly, Solid Power began delivering cells to BMW (OTCMKTS:BMWYY) for testing during the most recent quarter.
Albemarle (ALB)
Albemarle (NYSE:ALB) Continues to be an easy choice for battery stock investors who are not yet exposed. The company is the world’s leading producer of lithium which is a central component in the manufacture of EV batteries.
It’s just about everyone knows, lithium prices cratered this year which has rippled across the industry. Albemarle of course is known to be a volatile stock as are all commodities stocks. Frankly Speaking though, it’s basically just a matter of time before Albemarle rebounds.
Industry experts expect that there will be a lithium shortage likely by 2025. Thus, the demand pendulum will swing back in the company’s favor very likely sometime in 2024. All that’s needed is a bit of patience and faith in the electric vehicle industry. Assuming the EV sector doesn’t collapse, which is extremely likely, Albemarle is almost certain to provide strong returns for investors at some point in 2024.
Despite troubles of late, the company still expects sales to increase between 30 to 35% in 2023. Albemarle also projects a serious increase in production volumes by 2027 that signals supreme confidence to the markets.
Freyr Battery (FREY)
Not long ago, Freyr Battery (NYSE:FREY) Was primarily perceived as an environment first, greener battery company. The company has significant operations in Norway which lent it an air of being environmentally friendly. These days, I would argue that an investment in Freyr Battery is much more about pragmatism than anything else.
The reason I say that is because of the company’s focus on two important things. Number one, Freyr Battery is re-domiciling to the United States from Luxembourg. The move was recently approved by shareholders and was done in an effort to reduce the company’s tax burden which is extremely pragmatic.
Furthermore, the company is focused on semi-solid battery production. and that’s important because semi-solid batteries are an intermediary and proven technology. While many other firms are focused on solid state batteries, semi-solid batteries are again proven and offer something of an intermediate approach to the evolution of batteries. Again, this is a pragmatic choice that smooths some of the risk making investing a sensible choice. It makes it one of those battery stocks to buy.
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.
