Batteries may not be the first thing you think of when it comes to your stock investments, but perhaps they should be.
The world is increasingly technology-driven, and traditional fuel sources are on their way out.
Mobile devices are transforming nearly every aspect of daily life, and innovators are looking for better ways to power motor vehicles. Overcoming the limitations of today’s batteries is at the top of their to-do lists.
Batteries of the future will be smaller and more efficient, ensuring that the devices they power can be used longer between charges.
With so much attention focused on improving portable electricity supplies, there is no doubt that major breakthroughs are coming. When they do, those who invested in this industry have an opportunity to reap the rewards. The question is what are the best battery stocks to buy?
There are a number of companies hard at work on next-generation portable power. They have moved far beyond the disposable AAA D cells that consumers have relied on for decades.
Lithium Ion (LiOn) batteries solved some of the problems presented by single-use batteries, but they are expensive to produce.
Researchers are building on the LiOn technology to create small, cheap, long-lasting power sources that can recharged again and again.
Some of the most exciting developments include Lithium-air (Li-Air) batteries that can store up to ten times as much energy as their LiOn counterparts.
Lithium-metal batteries also show promise, as they can store up to four times as much energy as the electric car batteries in use today.
The cost to produce lithium-metal batteries is much lower than current technology, which means product prices will come down as well.
There is additional research being done on lithium-sulfur, silicon-carbon, and solar-powered batteries, though this is still in very early stages. Investors that choose stock in the company that is ultimately successful at developing and producing this type of power may enjoy significant profits when it comes to market.
The advantages of investing in battery stocks are fairly straightforward.
There is a proven demand for portable power, and companies that innovate in this area have a ready-made market to sell superior products.
The primary disadvantage of investing in battery stocks is the same one that plagues any investment decision: choosing the company most likely to successfully develop, produce, and market next generation batteries.
Research failures, competition, changes in the marketplace, and disasters like Samsung’s exploding smart phones are unpredictable, and they can disrupt a company’s ability to profit from battery technology.
Chemical company Albemarle [NYSE: ALB] is making impressive advancements in battery-related research, and the organization is now the world’s number-one lithium producer. That’s a big deal when it comes to the future of batteries.
In 2017, Albemarle [NYSE: ALB] boasted total revenue of $2.7 billion, with a full 36 percent of that coming from sales of lithium and related compounds like lithium carbonate and lithium hydroxide.
Analysts note that Albemarle’s market capitalization is at just $14 billion, which means there is plenty of room for it to grow.
Best of all, stock prices offer a solid value for investors, which means greater potential for long-term profits.
When the conversation turns to energy portable or otherwise no analysis is complete without looking at Tesla [NASDAQ: TSLA]. This organization has been a long-time innovator in the areas of electric transportation and solar-energy.
In 2017, Tesla stock increased by 48 percent, due in no small part to its leadership in battery development and production.
In fact, Tesla has opened its own battery production factory, the Gigafactory, and the company expects to add additional facilities in coming years.
The primary drawback to purchasing Tesla stock is the hefty price tag. In December 2018, it traded from $295 to $376 per share.
Panasonic has had a solid place in the market since consumer electronics started appearing in mainstream homes.
The company has a diverse product line, from televisions and home entertainment to factory equipment and industrial devices.
Panasonic has been dabbling in electric cars for some time, as a natural extension of its technological solutions for motor vehicle safety, entertainment, and on-the-road connectivity.
Today, Panasonic has partnered with Tesla on battery production at the massive Gigafactory, so as Tesla vehicle sales increase, so do Panasonic battery sales.
This close-knit relationship means good things for investors who want to be a part of Tesla’s future growth but can’t quite afford the premium stock price.
Choosing the best battery stock to round out your portfolio depends on your short-term and long-term financial goals, as well as the amount you wish to invest.
While each of these three, Albemarle, Tesla, and Panasonic, are leading players in the battery marketplace, they may not see simultaneous results.
Researchers in each organization are working on related but distinct battery solutions, and each has slightly different approach to the industry.
Albemarle is focused on raw lithium and developing new applications for use of this material.
Tesla is creating innovative products that rely on improved battery technology, and Panasonic is specifically focused on battery production.
For maximum exposure to the full range of battery-related possibilities, you may wish to invest in all three.