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The best battery stock to buy now? PCRFY vs. HON vs. SLD

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. Basically, battery vendors address infrastructure needs. On the other hand, choosing individual brands of electric vehicles involves the sometimes unpredictable nature of consumer trends and whims.

Therefore, investing in battery stocks makes more sense for many investors due to their underlying predictability. No, we don’t know which EV player will dominate over the next 10, 20, or even many years. Of course, You’re here (NASDAQ:TSLA) seems to have impregnable armor but that’s not a sure thing. However, even the mighty Tesla needs batteries to survive.

Another reason to consider major battery stocks centers around the huge total addressable market. Battery technologies do not exclusively benefit electric vehicles. As the world becomes increasingly digitalized, other industries will need power infrastructure solutions. Therefore, battery suppliers can have a long service life beyond the automotive field. With this comparison of battery stocks, investors can evaluate three intriguing players based on their risk-reward profile. This way, you can decide which idea best suits your needs.

PCRFY panasonic $10.40
HON Honeywell $194.97
SLDP Solid power $2.29

Panasonic (PCRFY)

Source: Illus_man/Shutterstock

While Japan-based public titles don’t get much attention these days, an exception should be made for panasonic (OCTMKTS:PCRFY). Primarily known for its innovations in consumer electronics, Panasonic has also gained relevance through its partnership with Tesla. Recently, Reuters reported that the company would delay its latest battery system for Tesla to improve performance. This apparently only served to boost stocks.

Since the beginning of this year, PCRFY has gained almost 27% of its capital value. In the last one-month period, it has gained almost 11%, making it one of the best battery stocks. Financially, the circumstances do not seem particularly propitious. For example, Panasonic is still striving to improve its three-year revenue growth rate from 2.6% below zero.

However, PCRFY is trading at a forward multiple of 13.04. In reduction of projected profits, Panasonic ranks better than 65.11% of the competition. Additionally, the shares are trading at 7.39 times operating cash flow. In contrast, the industry median statistic is 13.55 times higher. Thus, it is attractive in the context of reviewing discount-targeting battery stocks.

Honeywell (HON)

Stocks of Chinese electric vehicles.  An image of an electric vehicle being charged with other icons imposed on top;  a lightning bolt, a full battery, cogs

Source: Shutterstock

Multinational conglomerate and specialist in applied sciences, Honeywell (NASDAQ:HON) obviously has enormous relevance. 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 security solutions. Quite transparently, it carries a riskier profile than Panasonic at the moment. Since opening in January, HON has lost 8% of his net worth.

However, this circumstance could give HON the opportunity to run higher. Financially, Honeywell is a bit of a mixed bag. The company mainly draws its strength from its constant profitability. In particular, its net margin for the previous year stands at 14.54%, better ranked than 82.9% of its peers. Plus, it’s a high-quality company, as evidenced by its nearly 30% return on equity.

On balance, Honeywell offers decent metrics. Most notably, its Altman Z-Score reaches 4.02, indicating high stability and low risk of bankruptcy. Thus, it is a worthy contender regarding any battery stock comparison. Finally, analysts consider HON a moderate buy. Their price target sits at $226.40, implying nearly 15% upside potential.

Solid Power (SLDP)

Solid State Battery Design for Electric Vehicle (EV) Concept, New Research and Development Batteries with Solid Electrolyte Energy Storage for Future Automotive Industry, 3d Illustration.  QS Stock

Source: JLStock / Shutterstock.com

Easily the riskiest idea among the best battery stocks to buy right now, Solid power (NASDAQ:SLDP) is on the other hand one of the most promising from a scientific point of view. According to its website, Solid Power specializes in the chemistry of solid sulfide-based electrolytes and silicon-based anodes, which it says demonstrates impressive battery improvements and performance, especially when compared to the traditional lithium-ion approach. However, SLDP has slipped nearly 20% since the January open.

As is the case with other speculative battery stocks, red ink may allow more room to run higher. However, market participants will certainly incur significant risks. In particular, the company suffers from vulnerabilities at the bottom line. For example, its gross, operating and net margins are in negative territory over the past year. And this is badly the case for the last two metrics.

On the positive side, Solid Power benefits from a strong balance sheet with a strong cash-to-debt ratio of almost 26x. Additionally, its current three-year revenue growth rate is 69.4%. Finally, analysts see SLDP as a deadlock. However, the average price target stands at $3.50, implying more than 84% upside potential.

As of the date of publication, Josh Enomoto had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto helped negotiate major contracts with Fortune Global 500 companies. Over the past several years, he has provided critical and unique insights to investment markets, as well as various other industries including law, construction management and healthcare.


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