Battery stocks may be resurgent, even as flagging electric vehicle (EV) sales and similar skepticism have suppressed the wider sector. Increased regulatory refinement and the still-emergent GreenTech revolution increase battery stock picks in the coming months.
March 20, the Environmental Protection Agency issued new rules granting U.S. automakers additional time to reduce vehicle CO2 emissions. These revised regulations stipulate more gradual reductions for 2027, 2028 and 2029 before significantly intensifying, aiming for a 50% reduction in emissions by 2032 compared to 2026. Manufacturers can pursue various technological strategies to meet these goals through fully electric vehicles, hybrid EVs or plug-in hybrids. One thing is clear, though — battery demand is set to increase across the board.
Few areas will benefit as much as California, which already has twice the battery storage of any other state. You don’t have to be a California insider to benefit from the new battery rush, though — these stock picks will do just fine, no matter where you live.
Lithium Americas (LAAC)
Lithium Americas (NYSE:LAAC) is a battery stock pick at the top of the value chain: lithium mining and raw materials for batteries. Despite the sluggish market, it stands out as one of the most undervalued battery stocks, with strong potential momentum. As 2024 forecasts suggest, there is an imminent market upturn. Likewise, this Argentinian-focused mining company may soon surge. Experts project that lithium demand, crucial for batteries and renewable energy, will grow over 30% annually until 2030.
In 2023, Lithium Americas, like its sector counterparts, struggled with slow demand and an oversupply that depressed spot prices. However, demand is rebounding, and analysts predict a forthcoming undersupply that could elevate spot prices, favorably impacting Lithium Americas.
Furthermore, Argentina’s new president is advocating for the lithium sector, working to reduce operational hurdles, and recently discussed the strategic importance of lithium with Elon Musk, highlighting its significance for battery stock picks. Currently trading below its book value and at a lower price-to-forward earnings ratio than in recent years, Lithium Americas is optimally positioned as a top lithium stock for substantial gains.
Enovix (ENVX)
Enovix (NASDAQ:ENVX), a battery-centric penny stock, is at the forefront of revolutionary battery technology. This sets it apart from major battery producers like Tesla (NASDAQ:TSLA), which simply modified their lithium-ion batteries to exclude rare earth materials while keeping the same basic design. Enovix is transforming the industry with its development of 3D silicone lithium-ion batteries. These batteries are more scalable and suitable for high-capacity applications like smartphones and tech wearables.
Recently, Enovix has marked significant milestones. It received FDA approval for its batteries for vital sign monitors, including devices that track blood pressure and heart rate. Additionally, it won a significant contract with the U.S. Army to supply batteries for next-generation military wearables, bringing modern technology directly into the field.
While Enovix remains heavily invested in R&D, these recent achievements indicate the company is rapidly progressing toward commercializing its groundbreaking battery tech.
Edison International (EIX)
On the stabler side of the battery stock spectrum, California utility provider Edison International (NYSE:EIX) benefits from the state’s wider focus on energy storage while giving investors diversified gains and income to boot.
First, Edison International’s location in California, the U.S. state with the highest density of electric vehicles, presents a substantial market opportunity. Additionally, California’s ambitious target to achieve net-zero emissions by 2045 places Edison at the forefront of a significant overhaul in energy infrastructure.
Successfully navigating California’s strict regulatory environment, Edison International has positioned itself as a leader in shaping the future energy grid. The company is actively expanding its services to include commercial and enterprise fleet electric vehicle charging solutions, showcasing its ability to generate new revenue streams in a traditionally low-margin industry. This strategic move highlights Edison International’s potential as a solid long-term investment, making it a top diversified battery stock pick today.
In addition to its operational strategies, Edison continues to appeal to income investors with its solid dividend track record. The company has consistently raised its annual dividend since 2004, offering today a 4.16% trailing yield. This makes Edison International a well-rounded battery stock pick for those seeking a dependable income stream from their investments in the energy sector.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.