The best lithium stocks are needle-movers in a market expecting double-digit growth
-
- These best lithium stocks are benefitting from high prices and present substantial upside potential.
- Lithium Americas (LAC): Continues to expand its market share with investments in new lithium mining upstarts.
- Piedmont Lithium (PLL): Could provide an alternate lithium hydroxide sourcing option to China.
- Ganfeng (GNENF): A top lithium miner in China with an impeccable track record.
- Livent Corp (LTHM): Has lofty plans to increase production capacity by 2030.
- Albemarle (ALB): The shift to variable contracts has allowed ALB to benefit from higher lithium prices.
- Sociedad Quimica y Minera de Chile (SQM): Has generated 70% gross profits from its lithium mining segment.
- Standard Lithium (SLI): Massive potential of the Lanxess project bodes well for SLI over the long term.
Lithium is an important mineral for powering our technology, including cell phones and electric vehicles (EVs). The demand has made it one of the most sought-after metals on earth, with high prices expected to remain stable or rise in coming years as we continue using it frequently. Therefore, the best lithium stocks have the potential for a hefty upside potential ahead.
Moreover, EV adoption is becoming more popular than ever before. In fact, many countries are working hard to phase out sales of gas-powered cars in favor of cleaner alternatives such as EVs. The number of electric vehicles on our roads is expected to grow by leaps and bounds in the near future. With sales doubling last year, it’s not hard for us to see how this will continue.
In fact, recent statistics have shown EVs comprise more than 5% of the total automotive market. That’s a telling stat, as it’s somewhat of a tipping point. EVs will remain a permanent fixture in the automotive space, which makes lithium stocks an incredible long-term investment.
According to a McKinsey report, production needs will increase by 25% annually until 2030 to meet the growing demand for lithium. Having said that, lets look at seven of the best lithium stocks to invest in at this time.
Data last updated: October 20, 2022 2:40 AM EDT
|
Symbol
|
Company
|
Price
|
|---|---|---|
| LAC | Lithium Americas Corp | $22.34 |
| PLL | Piedmont Lithium Inc ADR | $51.35 |
| GNENF | Ganfeng Lithium Ltd | $6.65 |
| LTHM | Livent Corp | $26.82 |
| ALB | Albemarle Corp | $252.35 |
| SQM | Sociedad Quimica Y Minera DE Chile ADR R | $90.41 |
| SLI | Standard Lithium Ltd | $3.74 |
Best Lithium Stocks: Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) is one of the top lithium-mining upstarts aggressively expanding to increase its market share in the sector. It continues to buy out new businesses despite having a massive completed project in Argentina. The firm aims to capitalize on the rising demand for lithium from electric car producers and related sectors.
It recently acquired Millennial Lithium and has paired up with Arena Minerals and Australian lithium miner Green Technology Metals. Layer that with its massive Thacker Pass project, and you have a lithium juggernaut like none other.
The Thacker Pass project is poised to be its biggest lithium mining project, delivering 80,000 tonnes of lithium per annum once completed. Hence, LAC stock could see billions in revenue once the project gets past regulatory hurdles.
Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) is a pre-revenue lithium miner specializing in lithium hydroxide production. The global market for lithium hydroxide is likely to grow from 2022 to 2029 with a compound annual growth rate (CAGR) of 10.6%.
PLL is developing a couple of lithium projects in North Carolina, which could start producing cash flows within the next couple of years. Its Carolina projects benefit from a strategic location, with low power, labor and transport costs as well as higher by-product credits.
Moreover, it has stakes in multiple lithium projects with partners such as Atlantic Lithium and Sayona Mining. The lithium hydroxide is mainly sourced from China, and PLL could change things once its projects come online.
Best Lithium Stocks: Ganfeng (GNENF)
Ganfeng (OTCMKTS:GNENF) is among the world’s top-three largest lithium miners and the largest in China. It has mineral sources in China, Mexico, Argentina and Australia.
The company is involved throughout the lithium supply chain, from resource development to recycling. Its compounds are used for EVs, energy storage and other devices. Its diverse sources of lithium provide it with a robust competitive edge in securing raw materials for electric vehicle batteries.
Ganfeng Lithium boasts an incredible track record of growing its top and bottom lines over the past several quarters. Its annual revenue growth is almost 200%, with its net earnings growing by 640% from the previous year in its latest quarterly report. Despite posting incredible results, GNENF stock trades at significantly lower price multiples than its peers.
Livent Corp (LTHM)
Livent (NYSE:LTHM) has established itself as a leading pure-play in lithium. It produces lithium at a massive scale at incredible margins from the Argentinian region.
Moreover, its remarkable results over the past five years are a testament to the quality of its business. Its revenue and EBITDA have improved by 11.9% and 66.6%, respectively, over the past five years.
The company has some lofty plans to continue expanding its capacity over the next several years. It plans to increase its production from 20,000 metric tonnes per year to 100,000 metric tonnes per year by 2030. In doing so, it continues to diversify geographically and expand its footprint in Argentina. Though its stock isn’t cheap, it remains a great wager for the long term.
Best Lithium Stocks: Albemarle (ALB)
Albemarle (NYSE:ALB) is a specialty chemicals giant operating through three segments, including lithium, bromine, and catalysts. Company sales have grown more than 70% in the past decade, with sales growing organically with the firm increasing capacity and enjoying higher commodity prices.
The lithium business accounts for about 41% of overall revenues, selling lithium through fixed and variable contracts. ALB has recently shifted towards variable contracts, with lithium prices expected to remain robust for the foreseeable future.
It benefits from high lithium prices, and production capacity is expected to increase in the next three to five years to meet rising demand. It boasts the smartest combination of existing lithium resources in the sector.
Sociedad Quimica y Minera de Chile (SQM)
Sociedad Quimica y Minera de Chile (NYSE:SQM) is a leading low-cost lithium producer based in Chile. Though it has interests in multiple businesses apart from lithium, the division has been its fast-growing segment. It has generated an incredible 73% of the company’s total gross profits in the first half of 2022.
Similar to its peers, SQM has benefitted immensely from the higher lithium prices. Moreover, like ALB, it negotiated a major portion of its lithium contracts away from long-term contracts and closer to the spot market.
Additionally, its dividend payouts grew over the past year. Its shares are priced at roughly 12 times earnings, despite the massive demand for lithium.
Best Lithium Stocks: Standard Lithium (SLI)
Standard Lithium (NYSEMKT:SLI) is a top lithium development company with massive growth potential in the next few years. Its flagship project, Lanxess, is located in Southern Arkansas and has the potential to generate 20,900 tons of lithium carbonate annually. Moreover, it is estimated to have a project life of roughly 25 years with average annualized sales close to $283 million.
Additionally, SLI already has a direct lithium extraction plant facility in Southern Arkansas and plans to significantly ramp up investments to enter its commercialization stage. It has roughly $125 million in cash, while the total liabilities appear very small.
Hence, the company has the impetus to become a major lithium source down the road. However, it needs to effectively manage its liquidity positioning if it hopes to push on from here. But based on its incredible long-term outlook, SLI stock is worth investing in at current levels.
This post originally appeared at InvestorPlace.
On the date of publication, Muslim Farooque 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.
