While the electric vehicle revolution may be one of the most significant developments in the market today, an alternative to playing this segment can be found via the top battery growth stocks to buy. Sure, picking a specific EV brand theoretically offers the greatest upside potential. However, battery providers offer an infrastructural angle – something all EVs need. Therefore, it’s possibly a more reliable investment category.
Moreover, the biggest reason to consider battery growth stocks centers on the massive potential of the underlying industry. According to Polaris Market Research, in 2021, the global EV battery market sized reached a valuation of $50.12 billion. However, experts project that the segment will expand at a compound annual growth rate (CAGR) of 18.9% from 2022 to 2030. At the culmination of the forecasted period, the industry should command a valuation of $225.55 billion.
As well, it’s not just EVs that need battery technologies. The segment also features heavily in renewable energy solutions and other pioneering innovations. As a whole, Grand View Research anticipates that the global market size will see revenues of $329.84 billion by 2030. Thus, it’s important to consider the below battery growth stocks.
An applied science and industrial giant, Honeywell (NASDAQ:HON) has its hands on several compelling technologies. According to InvestorPlace contributor Faizan Farooque, the company launched its flow battery, which in part boasts up to 12 hours of energy storage capacity. Enticingly for contrarians, HON may be on a relative discount. Since the January opener, HON slipped nearly 9%.
Financially, the company offers a fairly decent profile. First, it enjoys a stable balance sheet. Most notably, its Altman Z-Score stands at 3.8, reflecting low bankruptcy risk. To be fair, its three-year revenue growth rate of 1.1% ranks just under middle-of-the-road for the industry. However, Honeywell delivers on the bottom line. Its net margin pings at 14%, outpacing over 82% of the competition.
Currently, Wall Street analysts peg HON as a consensus moderate buy. More importantly, their average price target stands at $220.64, implying growth potential of nearly 13%. Thus, it makes for a solidly attractive case for battery growth stocks to buy.
Well-known for its automotive portfolio, Toyota (NYSE:TM) also has invested heavily in the battery department. In recent years, several automotive publications noted that Toyota is developing a solid-state battery (SSB). Featuring higher energy density and potentially quicker charging times, SSBs may be a potential game-changer. Sure enough, Toyota represents one of the few institutions that own the scale to oversee such a grand project.
On the financial spectrum, Toyota offers an attractive bargain for forward-thinking contrarians. Right now, the market prices TM at a trailing multiple of 10.31. As a discount to earnings, Toyota ranks better than 67.75% of the competition. Also, TM trades at 8.67 times forward earnings. Against this metric, Toyota ranks better than nearly 63% of its peers. Turning to Wall Street, covering analysts peg TM as a consensus moderate buy. Further, their average price target stands at $161.99, implying nearly 17% upside potential. Thus, TM offers another blue-chip example of battery growth stocks to buy.
Not directly one of the battery growth stocks, Albemarle (NYSE:ALB) is a specialty chemicals manufacturing company. Per its public profile, Albemarle operates three divisions: lithium, bromine specialties, and catalysts. Further, the company owned the distinction of being the largest provider of lithium for electric vehicle batteries in 2020. In the trailing year, ALB gained over 35% of its equity value.
Despite this upside performance, on an objective basis, Albemarle appears undervalued. For instance, the market prices ALB at a trailing multiple of 10.8. As a discount to earnings, Albemarle ranks better than 66% of the competition. Further, ALB trades at a forward multiple of 8.62. For this metric, the company ranks superior to 84% of the field. Operationally, it also blows past most of the competition. Its three-year revenue growth rate stands at 22.6%. On the bottom line, its net margin is 36.75%. Both stats represent the top tier for the industry.
Finally, covering analysts peg ALB as a consensus moderate buy. Further, their average price target stands at $312.20, implying nearly 27% upside potential. Thus, it’s well worth consideration for battery growth stocks.
General Motors (GM)
Recognized globally as one of Detroit’s top automotive producers, General Motors (NYSE:GM) has been one of the legacy manufacturers that aggressively dove into the EV space. But it’s not just EVs themselves that’s driving momentum for GM stock. Rather, the company is hard at work on its Ultium battery technology. Along with providing a flexible battery architecture, Ultium offers greater energy density, lowered projected costs, and increased range.
Therefore, GM ranks among the top battery growth stocks to buy. Even better, the market seems to recognize the potential. Admittedly, shares slipped nearly 12% in the trailing year. However, since the January opener, GM stock gained nearly 21% of its equity value.
Financially, investors will likely appreciate its bargain value proposition. Currently, the market prices GM at a forward multiple of 6.88. As a discount to earnings, General Motors beats out 81.35% of its rivals. Turning to the Street, covering analysts peg GM as a consensus moderate buy. Further, their average price target stands at $53.45, implying a 30.72% upside potential.
Lithium Americas (LAC)
Another indirect player among battery growth stocks, Lithium Americas (NYSE:LAC) is a mining specialist. Specifically, it focuses on advancing lithium projects in Argentina and the U.S. With the underlying metal representing a pivotal component of next-generation batteries, LAC stands a great chance of fostering relevance for years to come.
In fairness, the market seems to have an on-again, off-again relationship with Lithium Americas. For instance, during the past 365 days, LAC gave up 11% of equity value. However, since the start of January, shares returned nearly 28%, a very healthy performance. Still, LAC will require some patience among prospective investors due to its aspirational nature. Aside from its largely stable balance sheet, Lithium Americas presents operational challenges. Of course, the biggest one right now is that it’s a pre-revenue enterprise.
Nevertheless, Wall Street supports it wholeheartedly. Right now, covering analysts peg LAC as a unanimous strong buy. Also, their average price target stands at $36.10, implying over 58% upside potential.
FREYR Battery (FREY)
For those that want to take a speculative shot with battery growth stocks, FREYR Battery (NYSE:FREY) offers an intriguing take. Focusing on decarbonizing transportation and energy systems, Freyr specializes in high-density, high-quality battery cells. Should the enterprise achieve its goals, it may help spark incredible advancements in both mobility and energy storage systems.
According to the Union of Concerned Scientists, “[s]torage can reduce demand for electricity from inefficient, polluting plants that are often located in low-income and marginalized communities. Storage can also help smooth out demand, avoiding price spikes for electricity customers.”
As awesome as the above narrative is, Freyr largely represents an aspirational example of battery growth stocks. Primarily, the company benefits from a cash-rich balance sheet. From there, challenges start to arise. Similar to Lithium Americas, Freyr is a pre-revenue business. Still, Wall Street gives FREY its blessings, pegging the stock a consensus strong buy. In addition, the average expert price target stands at $15.75, implying nearly 89% upside potential.
Solid Power (SLDP)
Finally, for a truly speculative take on battery growth stocks, Solid Power (NASDAQ:SLDP) may be of significant interest. As InvestorPlace’s Faizan Farooque stated, “[i]ts cutting-edge solid-state batteries are raising the bar for what’s possible with battery technology. It packs more energy into a smaller package while reducing weight and creating greater safety.”
Further, Farooque added that “Solid Power’s innovative battery technology could be a game changer for the electric vehicle industry. It can potentially increase the range of vehicles and decrease charging time.” As an aspirational entity, SLDP generates considerable excitement among battery growth stocks.
That’s the good news. The not-so-great news is that we’re talking yet again about an aspirational idea. True, Solid Power generates revenue. However, at only $2.81 million in the third quarter of 2022, it’s not exactly a nominal growth machine. Interestingly, Wall Street analysts peg SLDP as a consensus hold. However, those who are bullish are exceedingly so. Currently, analysts’ average price target stands at $6.50, implying nearly 95% upside potential.
On the date of publication, Josh Enomoto 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.