With the wider proliferation of electric vehicles sparking discussions about the future of mobility and transportation, investors should start targeting the best battery stocks to buy now. Fundamentally, battery providers address infrastructural needs. On the other hand, picking individual EV brands involves the sometimes-unpredictable nature of consumer trends and whims.
Therefore, investing in battery stocks makes more sense to many investors because of their underlying predictability. No, we don’t know which EV player will dominate for the next 10, 20, or however many years. Sure, Tesla (NASDAQ:TSLA) appears to have an impregnable armor but it’s not a sure thing. However, even mighty Tesla needs batteries to survive.
Another reason to consider the top battery stocks centers on the massive total addressable market. Battery technologies don’t exclusively benefit EVs. As the world becomes increasingly digitalized, other industries will require power infrastructure solutions. Therefore, battery providers may have a long shelf life beyond the automotive realm. With this battery stock comparison, investors can assess three intriguing players based on their risk-reward profile. That way, you can decide which idea best suits your needs.
While Japanese-based public securities don’t get much attention these days, an exception should be made for Panasonic (OCTMKTS:PCRFY). Primarily known for its consumer electronics innovations, Panasonic also gained tremendous relevancy for its partnership with Tesla. Recently, Reuters reported that the company will delay its latest battery system for Tesla to improve performance. That has apparently only served to invigorate shares.
Since the beginning of this year, PCRFY gained nearly 27% of its equity value. In the trailing one-month period, it gained almost 11%, making it one of the top battery stocks. On the financial side, circumstances don’t seem particularly auspicious. For example, Panasonic is still working to improve its three-year revenue growth rate of 2.6% below zero.
However, PCRFY trades at a forward multiple of 13.04. As a discount to projected earnings, Panasonic ranks better than 65.11% of the competition. Also, shares trade at 7.39 times the operating cash flow. In contrast, the sector median stat is a loftier 13.55 times. Thus, it’s appealing under the context of battery stock review targeting discounts.
A multinational conglomerate corporation and applied-sciences specialist, Honeywell (NASDAQ:HON) obviously carries tremendous relevancies. However, due to the nature of its conglomerate structure, it sometimes gets lost in the noise that HON ranks among the best battery stocks to buy now thanks to its safety solutions. In full disclosure, it carries a riskier profile than Panasonic at the moment. Since the January opener, HON lost 8% of its equity value.
However, this circumstance could give HON room to run higher. Financially, Honeywell is somewhat of a mixed bag. Primarily, the company draws strength from its consistent profitability. In particular, its trailing-year net margin comes in at 14.54%, ranked better than 82.9% of its peers. Also, it’s a high-quality enterprise as determined by its return on equity of nearly 30%.
On the balance sheet, Honeywell offers decent metrics. Most conspicuously, its Altman Z-Score pings at 4.02, indicating high stability and low bankruptcy risk. Thus, it’s a worthwhile contender regarding any battery stock comparison. Finally, analysts peg HON as a moderate buy. Their price target clocks in at $226.40, implying nearly 15% upside potential.
Solid Power (SLDP)
Easily the riskiest idea among the best battery stocks to buy now, Solid Power (NASDAQ:SLDP) is on the flip side one of the most promising from a scientific angle. Per its website, Solid Power specializes in sulfide-based solid electrolyte and silicon-based anode chemistry, which it claims demonstrates impressive battery improvements and performance, particularly over the traditional lithium-ion approach. However, SLDP slipped nearly 20% since the Jan. opener.
As is the case for other speculative top battery stocks, the red ink may allow extra room to run higher. However, market participants will certainly be incurring significant risks. Notably, the company suffers vulnerabilities in the bottom line. For example, its gross, operating, and net margins sit in negative territory in the trailing year. And that’s badly so for the latter two metrics.
On the positive side, Solid Power enjoys a solid balance sheet with a strong cash-to-debt ratio of nearly 26 times. Also, its current three-year revenue growth rate comes in at 69.4%. Lastly, analysts peg SLDP as a hold. However, the average price target stands at $3.50, implying over 84% 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.