Special Report: Battery Technology and Energy Storage Investing for 2022

Just a few years ago, environmentally conscious investing was seen as a noble way to lose some money. 

As recently as the early 2010s, many renewable energy companies were relying on a mountain of government subsidies to remain afloat — and were still underperforming the broader markets.    

Green investors may have been a laughingstock in the past, but they’re the ones laughing now. In the last five years, renewable energy stocks have trounced the market indexes; the iShares Global Clean Energy ETF (NASDAQ: CLN) has more than doubled the performance of the Dow Jones Industrial Average in that time. 

iShares Global Clean Energy ETF

That outperformance looks set to continue for the foreseeable future. Allied Market Research projects that the global renewable energy market will grow at a compound annual growth rate (CAGR) of 8.4% through 2030 — a considerable premium over the stock market indexes, which tend to grow at a long-term average rate of 7% per year. 

But while renewable energy may have turned profitable, it’s still facing substantial challenges, and one of the biggest involves storage.

Intermittent Power and Electric Vehicles (EVs)

Nearly half of all renewable energy generated today comes from intermittent sources like wind and solar — and that proportion is expected to rise in the years ahead.

Global Renewable Energy Generation

These sources depend on uncontrollable natural conditions (i.e., weather) to produce electricity and thus can’t be deployed “on-demand” like conventional power plants to meet the needs of the energy grid. 

Figuring out how to effectively plug intermittent renewables into today’s power grid is complicated enough; a green grid will need sophisticated energy storage devices to hold onto excess intermittent power and release it when needed. The problem gets even more complicated in the context of the EV revolution. 

Tens of millions of new EVs are expected to hit American roads in the next decade, where they’ll draw hundreds of thousands of gigawatt-hours of electricity from an already-strained grid. 

To compete with internal combustion engine (ICE) cars, EVs also need to store all that electricity in a way that allows for hundreds of miles of travel between charges. Today, the longest-range Tesla can travel 405 miles on a single charge — considerably less than a basic ICE-powered Honda Civic, which gets 434 miles per tank of gas.

Fortunately, one simple technology can solve both of these problems: batteries. The aforementioned Allied Market Research projects that the global industrial battery market will grow far faster than the broader renewables market over the next decade, with a projected CAGR of 13.2% through 2030. 

In other words, battery stocks could consistently double the performance of the broader markets in the years ahead. Below, we look at three of the biggest players in the global battery industry. 

Albemarle (NYSE: ALB)

When we talk about batteries in this report, we’re almost exclusively talking about lithium ion batteries. They’re the only type powerful enough for routine use in EVs and electrical grids. 

With that in mind, one battery stock that can’t be overlooked is the world’s largest lithium producer, Albemarle. 

The miner and chemical manufacturer produces a variety of materials, so it isn’t a pure play on battery technology — but lithium production is its largest single business segment, accounting for more than a third of its total revenues. 

That share is only set to increase in the next few years; Albemarle recently announced plans to double its lithium production capacity by 2025. 

Albermarle Chart

Financially, the company looks more and more like a blue chip with each passing year. It is robustly profitable on an earnings basis, has a sustainable debt-to-equity ratio of less than 40%, and pays a small dividend. 

Of course, Albemarle only produces the raw materials for lithium ion batteries. Assembling them is an entirely different job… 

Microvast Holdings (NASDAQ: MVST)

And one of the purest plays on battery assembly is Microvast, a dedicated developer of lithium ion batteries for electric vehicles and power storage. 

Microvast is a newcomer to equity markets; the company went public in July 2021 through a merger with a special purpose acquisition company (SPAC). However, it already has an impressive set of R&D partners, including Ford and specialty truck manufacturer Oshkosh.

Microvast Holdings Chart

The company has posted steady revenue growth since going public and has a debt-to-equity ratio below 20%. However, it’s not yet profitable — and heavy capex spending (which will eventually enhance its battery production capacity) has scared off some investors in recent years, as you can see above. 

The last company we’ll discuss in this report is on the front lines of integrating lithium ion batteries into power grids… 

Enphase Energy (NASDAQ: ENPH)

This energy management company is the world leader in supplying microinverter-based solar-plus-storage systems.

Enphase boasts several large international partners, including solar energy provider MSpectrum, a solar energy renewable provider headquartered in Pasig, Philippines. 

The solar market in the Philippines — where the tropical climate is extremely compatible with Enphase’s IQ 7 converter system — is growing rapidly due to the Renewable Energy Act signed 12 years ago.

Enphase Chart

The company has a concerningly high debt-to-equity ratio (over 160% at the time of writing), but it is profitable on an earnings basis and has reported extremely strong and consistent revenue growth for the past five years. 

Another Way to Invest in the Future of Renewable Energy

These three stocks are some of the most prominent names in the increasingly important battery segment of the renewable energy industry. 

But this report is not a comprehensive list of battery stocks you should invest in — and it’s certainly not exhaustive when it comes to renewable energy stocks. 

If you’re looking to profit from some of the biggest trends in green technology, check out The Wealth Advisory. Subscribers are sitting on several 300%+ gains right now — and one gain of more than 1,000%.

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