QuantumScape

These battery stocks could create shareholder value thanks to growth in the electric vehicle (EV) market.
FREYR Battery (FREY) — Agreements with large energy companies are likely to provide a growth roadway ahead.
Panasonic (PCRFY) — A new facility in Japan dedicated to the production of EV lithium-ion batteries should speed up production and increase revenue.
QuantumScape (QS) — A new research and development center in Kyoto will open a new market of customers in the Asia-Pacific region.
Romeo Power (RMO) — A recent agreement to provide lithium-ion batteries for a new line of low-speed EVs could mean enhanced revenue.

Battery stocks, our topic for today, have had a rough year so far. Fears of an economic downturn have added to the woes of an industry plagued by persistent supply chain issues.

Yet, in the long-run, the outlook remains bright for companies in the growing electric vehicle space. Recent research highlights, “Between 2020 and 2026, the size of the global electric vehicle market is expected to increase over four-fold to reach an estimated market size of some one trillion U.S. dollars by 2026.” Such an increase would mean a compound annual growth rate (CAGR) of over 23%.

High inflation and expected interest rate hikes have made investors wary of putting names in high-growth names that may not yet be profitable. Since the beginning of 2022, the S&P Kensho Electric Vehicles index has fallen 33.5%. During the same period, the Global X Lithium & Battery Tech ETF (NASDAQ:LIT) has dropped 15.4%.

Despite recent losses, many analysts concur that electric vehicles are the future of transportation. Therefore, manufacturers of key components for these cars are likely to soar as consumers switch to all-electric in the face of climate concerns as well as rising gas prices.

With that information, here are four battery stocks to buy in the coming months:

FREYR Battery (FREY)

The first stock on today’s list, FREYR Battery (NYSE:FREY), comes from Norway. It design low-cost lithium-ion batteries for a variety of applications. It is building a facility in Norway, slated to begin production of lithium-ion batteries later this year.

Earlier this month, this pre-revenue company reported first-quarter financials. Net loss was $34.9 million, compared to a net loss of $28 million the previous quarter. Loss per share was 30 cents, compared to 24 cents in Q4 FY21. Cash and equivalents totaled $524.6 million.

Recently, the company announced an offtake agreement with Powin, an Oregon energy-storage solutions provider. FREYR has agreed to supply Powin with 28.5 GWh of battery cells from 2024 to 2030. This transaction represents the latest in a series of offtake agreements with other companies, including Siemens Energy (OTCMKTS:SMNEY), AP Moeller – Maersk (OTCMKTS:AMKBY), and Honeywell International (NASDAQ:HON).

FREY stock is down 32.8% year-to-date. The 12-month median forecast stands at $18 a share. FREY Battery’s market capitalization is currently shy of $1 billion.

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Panasonic (PCRFY)

Next up on our list is the consumer electronics giant Panasonic (OTCMKTS:PCRFY). The Japanese group is also the world’s third-largest producer of EV batteries. It has partnerships with Toyota Motor (NYSE:TM) and Tesla (NASDAQ:TSLA) to produce batteries for their EVs.

In early May, Panasonic released FY22 financials. Net sales were 7.39 trillion yen ($57.81 billion), up 100% year-over-year. Net profit attributable to shareholders also went up by 155%.

Investors paid close attention to the Energy segment, where sales increased by 27% to 764.4 billion yen from a year ago. This is due to increased sales of automotive batteries and power storage systems with significant growing demand for EVs globally as well as growing demand for Internet-of-Things (IoT) and social infrastructure use.

In fiscal 2023, management expects strong revenue, thanks to recovery in the automobile and aviation industries as well as growing demand for automotive batteries, according to a statement.

Panasonic recently announced construction plans for a new lithium-ion battery production facility in Japan. Production should begin in March of 2024.

Despite the positive outlook, PCRFY stock has lost about 19.6% since January. The current price supports a dividend yield is 2.21%. Shares are trading at 10.76 times forward earnings and 0.37 times trailing sales. Finally, the 12-month median forecast stands at $11.44.

QuantumScape (QS)

Our third battery stock pick is QuantumScape (NYSE:QS). This pre-revenue group focuses on solid-state EV batteries. It is working on developing a fast-charging, anode-less EV battery, capable of recharging up to 80% in 15 minutes.

In late April, QuantumScape issued Q1 metrics. GAAP net loss totaled $90.4 million, compared to $75 million the year before. Diluted loss per share was 21 cents. The year before, diluted loss per share was 20 cents.

Management recently announced a new office and research laboratory in Kyoto, Japan. This stepping stone into the Asia-Pacific market could help QuantumScape take advantage of the already thriving battery industry in Asia. Meanwhile, investors stateside are more than ready to see commercial production and revenues before too long.

In November 2021, QS stock hit a record high of $43.08. But the past six months, we have seen a different story and it is down 44.3% YTD. At present, the 12-month median forecast stands at $19. The market cap for QuantumScape is $5.21 billion.

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Romeo Power (RMO)

The final battery stock for today is Romeo Power (NYSE:RMO). It designs modular batteries for a variety of EV applications, ranging from delivery vans to long-haul trucks.

In early May, Romeo Power released Q1 financials. Revenue was $11.6 million, compared to $1.1 million the year before. Diluted loss per share was 60 cents.

Recently, the company announced it’s become the sole provider of lithium-ion batteries for an undisclosed manufacturer’s new line of next generation low-speed electric vehicles (LSEVs). According to Romeo, their batteries were chosen specifically to meet the high-reliability requirements of the customer.

Like its peers, RMO stock has suffered in 2022 and is down close to 74%, dragging the market cap down to $132.7 million. Shares are changing hands 6.95 times trailing sales. Finally, the 12-month median forecast stands at $1.80.

On the date of publication, Tezcan Gecgil 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.

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In this Article:

Where will all these unicorns come from?
Renewables Will Heat up in 2022
Invest Like a Wall Street Titan on a Main Street Budget

Earlier this week, I told you the stock sell-off we’re seeing today is setting off a boom in private markets.

According to Fortune, more than 80% of venture capital and private equity firms say they plan to raise capital in 2022. That’s up from 75% in 2021.

And the amount of money they’re raising is increasing. In 2021, private equity funds raised at least $733 billion globally, surpassing every previous year on record.

This year, they’re forecast to raise $952 billion.

The rush from the public markets into the private markets makes sense for these Big Money players when you consider private companies also have lower volatility than publicly traded companies… and perform better during challenging times.

In 2021, the pace of new unicorns (a private company that reaches a $1 billion valuation) increased considerably, reaching an average of two new unicorns minted per day. And I expect that activity to increase this year.

That begs the question: Where will all these unicorns come from?

The answer is: Clean energy.

Now, I’m a capitalist. So I don’t look at investment ideas just because they make us feel good. But regardless of what you think about “clean energy,” it’s the hottest investment trend in the United States right now.

Renewables Will Heat up in 2022

Before any bias you might have about “clean energy” comes rushing out, let me be clear…

Today’s clean energy industry is different.

The smartest minds in technology are working in it… and the smartest minds in finance are investing in it.

Larry Fink is the CEO of Blackrock, the largest asset manager in the world with $10 trillion in assets under management.

Here’s an excerpt from his annual letter published in January 2022:

The next 1,000 unicorns won’t be search engines or social media companies, they’ll be sustainable, scalable innovators – startups that help the world decarbonize and make the energy transition affordable for all consumers.

Think about that.

Fink is one of the wealthiest, most well-connected men on the planet. He’s not some starry-eyed kid or a tree hugger who wants to “change the world.” This is one of the most influential money men on the planet.

He goes to bed thinking about money. And he wakes up thinking about money.

And he knows there is a stadium-sized stack of money to be made in clean energy technology.

According to Allied Market Research, the 2020 value of renewable energy was $881 billion… and projected to reach nearly $2 trillion by 2030.

Renewable stocks are outperforming the broader market, returning approximately 159% since the end of 2019 compared to the S&P 500’s 29% within the same span.

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But it’s in the private market where you stand to make the biggest gains from the clean energy trend.

Take the electric vehicle (EV) battery tech company, QuantumScape, for example. Famed investor Jeremy Grantham invested $12.5 million in the company while it was private. QuantumScape went public in 2020 via a SPAC merger… and his stake swelled to $638 million before the year was up.

That’s a 5,005% return. That far outweighs the potential 719% gain the average investor could’ve hoped to make by buying into QuantumScape when it announced its SPAC merger.

Here’s another example. In 2017, Saudi businessman Abdul Latif Jameel stumbled upon on the EV startup named Rivian. He made several private investments in the company at an estimated valuation between $1–2 billion.

Rivian went public in November 2021 at an $83 billion valuation… netting potential returns between roughly 4,000–8,000%. Within weeks of the IPO, Abdul was sitting on a potential return of 14,900%… enough to turn every $1,000 invested into $150,000.

Meanwhile, regular investors that got in on IPO day saw peak gains of 80%… enough to turn $1,000 into $1,800.

As you can see, investing in clean energy companies before they become public is how you can potentially move the needle on your financial life without putting your current lifestyle at risk.

But if you didn’t know the wealthy insiders behind these deals like Grantham or Jameel did, you wouldn’t have been able to invest in them. So I’ve made it my mission to change that.

Invest Like a Wall Street Titan on a Main Street Budget

Ever since my early days on Wall Street, it’s driven me crazy. As a retail investor, you couldn’t access the private market. Legally, there wasn’t any way to get into these deals.

Finally, the SEC has cut through the red tape allowing the public to get in.

But cutting the red tape doesn’t mean Wall Street will say, “Come on in!”

They’re not going to welcome you like a long-lost brother… or roll out the red carpet and kiss you on both cheeks.

The best deals are still only found in one place. And that’s on the “inside” of the market.

To find these deals, you’ve got to move in the right circles of venture capitalists, billionaires, and influential deal makers. That’s where you find the best deals.

[Alert: Warren Buffett already invested $15 billion in this trend… said he’s ready to invest $15 billion more]

The good news is – and it’s going to sound like I’m bragging, but I promise you I’m not – I’m fortunate enough to be in that position.

I’ve gone to those events. I know many of the billionaires in the early investing space. I’ve been on their private jets, attended their private parties, and am on a first-name basis with many of the top dealmakers operating in the market today.

And recently, I’ve uncovered what I believe could be the next unicorn in the clean energy space.

This company in the American heartland says it’s found a way to produce environmentally friendly oil without drilling or fracking.

After vetting it, Wall Street powerhouse JPMorgan cut a check to be its largest shareholder… I’m talking about the biggest bank in the United States.

JPMorgan is behind some of the biggest private deals, including Facebook, Tesla, and EV maker Rivian. And some of its deals have returned 47x, 100x, and 159x.

That last one is enough to turn $1,000 into $160,000.

And remember… Regardless of what you think about clean energy, it’s the hottest investment trend in the U.S. right now.

Avoiding those investments because of personal bias only hurts your financial future.

JPMorgan will still be this company’s largest shareholder… and it’ll still cash out its shares for bigger gains than investors who bought too late… or didn’t buy at all.

Which side of that trade will you be on?

Let the Game Come to You!

Teeka Tiwari
Editor, Palm Beach Daily

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