Battery stocks should be on every investor’s radar. These companies have great upside potential and are helping us transition to a carbon-free energy model. The global shift towards renewable energy and electric vehicles (EVs) is accelerating, making battery technology more crucial than ever.
In this article, we’ll discover three battery stocks that are strong buys. Investors can consider them undervalued due to their growth potential as well as the fact that the market could be mispricing them relative to what they could have in store for 2024.
One is a marquee brand that’s well-known in the electric vehicle space, and could be set to soar higher thanks to the predicted drop in interest rates next year. Another is a momentum play that’s trading at a discount to its price-to-earnings potential. The last company may provide some tactical value to investors’ portfolios due to being based in South Korea.
So here are three stocks to buy for 2024 and beyond.
Tesla (TSLA)
Tesla (NASDAQ:TSLA) is a well-known leader in the electric vehicle (EV) industry, and their advancements in battery technology are equally impressive.
I believe that TSLA stock could be unfairly undervalued. In October, the company’s shares fell nearly 5% following Panasonic’s reduced battery production, raising concerns about EV demand. Furthermore, CEO Elon Musk also highlighted challenges with Cybertruck production and the impact of high-interest rates on EV affordability.
However, with the expected fall in interest rates next year, we could expect an uptick in demand for EVs going into 2024.
TSLA stock’s current undervaluation can be inferred from its robust valuation ratios: a trailing PE ratio of 81.51 and a forward PE of 69.13 indicate that the market is mispricing it. Despite a high PE, Tesla’s growth prospects are significant, as reflected in its PEG ratio of 2.86. This makes it one of those battery stocks to buy.
Amperex Technology (CATL)
Amperex Technology (OTCMKTS:CATL) s a leading global supplier of power battery systems and a major innovator in the battery space.
CATL is my pick for investors who want to invest in one of those momentum battery stocks for short-term gains into 2024.
It recently received the prestigious Technobest 2024 award for its Shenxing battery, the world’s first 4C superfast charging LFP battery. This innovation allows for 400 km of driving range with just a 10-minute charge and over 700 km on a full charge.
The market will undoubtedly feel bullish about this award being given to the company, potentially making EVs more affordable and sustainable moving forward.
Trading at just 14.61 time earnings, I feel that CATL’s shares are simply too cheap for investors to pass up on combined with this strong catalyst.
LG Chem (LGCLF)
LG Chem (OTCMKTS:LGCLF) is another significant player in the battery market, known for manufacturing lithium-ion batteries for EVs and energy storage systems.
LGCLF is a South Korean company, which could also provide some strategic and diversification benefits for investors.
What I like about LGCLF is that it’s also riding high on short-term tailwinds that should interest investors. This month, it announced plans to invest $820 million in constructing a battery cathode material factory in Tennessee, USA, as part of a broader $3 billion investment through 2027.
Like others on this list, LGCLF may also be potentially undervalued. Its shares dipped sharply this year amid concerns over its parent company’s, LG Chem, issuance of exchangeable bonds worth $2 billion. Its valuation is currently below its long-term average, suggesting that it could rise moving forward as the market continues to adjust to the bonds being issued.
This then makes LGCLF one of those battery stocks to buy.
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.