So in this article, we’ll detail three of the best battery stocks that investors should pay attention to. These companies have bright futures ahead of them due to their high margins and optimistic analyst ratings.
Here are the three stocks to consider.
Tesla (TSLA)
Tesla’s (NASDAQ:TSLA) advancements in battery technology could make it a strong contender in the battery market. Indeed, there have been some developments to suggest that this could be the case.
TSLA produces about 80 MWh worth of 4680 battery cells per week, which is enough to potentially power over 1,200 vehicles weekly. The 4680 battery cell is crucial for powering some of its newer models, such as its Cybertruck.
TSLA is one of those battery stocks to consider because it’s heavily bringing down its cost basis to produce these batteries. Some analysis predicts that it could halve its cost basis as production ramps up, due to the fixed costs of production being spread over more units.
At the same time, the company also released information that suggests that its batteries are also very robust at maintaining power levels, losing only about 12% of capacity after 200,000 miles on average.
Tesla is then one of those battery stocks leading the way in efficiency and longevity.
Contemporary Amperex Technology (CATL)
Contemporary Amperex Technology (OTCMKTS:CATL) is a Chinese company and one of the largest manufacturers of lithium-ion batteries for electric vehicles.
CATL, too, is making significant developments as a robust battery stock in the Asian market. Its strength comes from its Shenxing battery, which features fast charging capabilities. CATL’s batteries are made with lithium iron phosphate (LFP) and can reportedly drive 400 kilometers on a 10-minute charge and 700 kilometers on a full charge.
These batteries would give them a significant leg up over their peers due to providing quicker charging times and longer driving ranges. The company gave guidance that the batteries could become commercially available as soon as 2024.
While the battery production is poised to be conducted in China, CATL is investing over HK$1 billion (US$128 million) in a new headquarters and research and development center in Hong Kong. The R&D center will focus on developing patents that can be licensed to other companies. This is expected to accelerate its own efforts in developing market-leading batteries but could also open up new streams of revenues as well.
Panasonic (PCRFY)
Panasonic (OTCMKTS:PCRFY) has long been a battery industry player, especially known for its collaboration with Tesla. But not to be overshadowed by its partnership with the automaker, Panasonic is making some serious moves in the market on its own accord.
Specifically, the company announced plans to significantly increase its annual production capacity for EV battery cells, aiming to reach 200 7GWh by March 2031. This would effectively quadruple its battery production. The growing EV market was cited as one tailwind, but Panasonic is also exploring other battery solutions, including cobalt-free options and cells with an energy density of 1,000 Wh/l €‹ €‹.
With this development in mind, there’s good reason to suggest that Panasonic could be trading at undervalued levels. Its margins are robust, with an EBITDA margin of 9.32% on 58.10B of annual revenue.
If it maintains the same profitability level while boosting its top line, there could be a significant implied upside for its stock price as it trades at only 7.51 times earnings.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.