Demand for lithium is set to increase exponentially in the next few years. In fact, according to Statista, demand for lithium may very well double to 820,000 tons in that time. Some of that demand will come from companies that are manufacturing the batteries that we use every day. For example, lithium is an essential component of the batteries that power our mobile devices.
But the real growth will come as the United States goes all-in on electric vehicles (EVs). The Biden administration recently announced plans to have the U.S. government’s fleet of over 600,000 vehicles converted to EVs.
And as you’re aware, EV stocks are in a bubble of some sort at the moment. Some of that is due to the increasing number of companies that went public last year. However, as investors are beginning to realize, not all of these companies will be the next Tesla. In fact, some of these companies may never be successful at bringing an EV to market, at least not at the scale that will be required.
The ones that do make it will need lithium and lots of it. To help you sift through the best lithium stocks to buy, we’ve put together this special presentation.
Quick Links
- Tesla
- Albermarle
- Sociedad Quimica y Minera
- Livent
- Lithium Americas
- Galaxy Resources
- American Battery Metals
#1 - Tesla (NASDAQ:TSLA)
In late 2019, Tesla (NASDAQ:TSLA) announced that it was entering the mining business. In the interest of full disclosure, the consensus at the time suggested that Elon Musk had his eyes on other minerals and was content to not become a lithium miner. At least not initially.
Still Tesla stands to be a kingmaker when it comes to lithium stocks. And that’s reason enough to keep the company on your list of lithium stocks. You’ll find the company’s name associated with many of the company’s on the remaining list and with good reason. Tesla understands it has to closely manage its supply chain. Therefore it’s going to look to lock up deals with companies that can help the company’s aspirations.
Many market watchers, including myself, have been wrong on Tesla. The company and its investors have shrugged off the naysayers. Now that the company is delivering cars, the sky appears to be the limit for what the company can achieve. And that may include lithium mining.
About Tesla
Tesla, Inc designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. The Automotive segment offers electric vehicles, as well as sells automotive regulatory credits; and non-warranty after-sales vehicle, used vehicles, body shop and parts, supercharging, retail merchandise, and vehicle insurance services.
Read More - Current Price
- $342.03
- Consensus Rating
- Hold
- Ratings Breakdown
- 14 Buy Ratings, 16 Hold Ratings, 9 Sell Ratings.
- Consensus Price Target
- $230.18 (32.7% Downside)
#2 - Albermarle (NYSE:ALB)
Albermarle (NYSE:ALB) is not a pure play among lithium stocks. The specialty chemicals maker doesn’t mine lithium but it does play a key role in the next stage of the chain. Albemarle works with lithium salts to produce lithium compounds such as lithium carbonate, lithium hydroxide, and lithium chloride on its global production sites. Both lithium carbonate and lithium hydroxide are components of lithium-ion batteries that are currently the standard for electric vehicles.
ALB stock had a nice run to enter 2020. Like the rest of the market it sold sharply at the onset of the pandemic. But since then the gain in the stock has been spectacular. And most of that gain has come since the election.
Albermarle is not a small company. With a market cap of $17.87 billion, it’s an established, global company. The company belongs to the exclusive Dividend Aristocrat club having increased its dividend for the last 27 years.
About Albemarle
Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Energy Storage, Specialties and Ketjen. The Energy Storage segment offers lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride; technical services for the handling and use of reactive lithium products; and lithium-containing by-products recycling services.
Read More - Current Price
- $109.55
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 15 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $114.47 (4.5% Upside)
#3 - Sociedad Quimica y Minera (NYSE:SQM)
If you’re going to invest in lithium miners, you might want to start in the country that has the largest amount of lithium reserves. That would be Chile, and that’s the home country of Sociedad Quimica y Minera (NYSE:SQM). According to CNBC, Chile is currently home to 7.5 million metric tons of lithium.
Investing in SQM stock gives investors exposure to lean into two of the trends that will dominate the investment landscape for the next decade. First is lithium. As of December 2019, the company had approximately 15% of the market share and in the trailing twelve months ending September 30, 2020, the company had generated $346 million in revenue from lithium. A total that accounted for 16% of the company’s gross profit.
Sociedad Quimica y Minera also has a Sustainable Development Plan that conforms to the Global Reporting Initiative (GRI) sustainability reporting standards. With climate change issues figuring to dominate clean energy initiatives, SQM looks to be a sought-out business partner with a commitment to be carbon neutral by 2030.
And that’s where the news gets better for investors because the United States has historically had a good trading relationship with Chile.
About Sociedad Química y Minera de Chile
Sociedad Química y Minera de Chile SA operates as a mining company worldwide. The company offers specialty plant nutrients, including sodium potassium nitrate, specialty blends, and other specialty fertilizers under Ultrasol, Qrop, Speedfol, Allganic, Ultrasoline, ProP, and Prohydric brands. It also provides iodine and its derivatives for use in medical, agricultural, industrial, and human and animal nutrition products comprising x-ray contrast media, biocides, antiseptics and disinfectants, pharmaceutical intermediates, polarizing films for LCD and LED screens, chemicals, organic compounds, and pigments, as well as added to edible salt to prevent iodine deficiency disorders.
Read More - Current Price
- $38.78
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $48.69 (25.5% Upside)
#4 - Livent (NYSE:LTHM)
Livent (NYSE:LTHM) is a cautionary tale of lithium miners. The company spun off from FMC (NYSE:FMC) in October 2018. The investing thesis at the time was that FMC was among the largest global lithium businesses and the company’s management wanted Livent to make lithium its sole focus.
But the stock never got going. And then just when investors started to recognized the potential to be had from lithium, the novel coronavirus wreaked havoc on supply chains.
This affected the company’s top and bottom lines in 2020. But if you’re going to invest in lithium, you’ve got to be playing the long game. The company generates approximately 61% of its revenue from lithium carbonate, lithium hydroxide and lithium chloride which are used in the EV market. And the company has a supply agreement with Tesla that runs through 2021.
And recently, investors in LTHM stock have been nicely rewarded. The stock recently reached its all-time high at $23.99 and although it’s had a pull back, the stock is still trading above IPO levels. The company is pledging to be carbon neutral by 2040.
About Livent
Livent Corporation manufactures and sells performance lithium compounds primarily used in lithium-based batteries, specialty polymers, and chemical synthesis applications in North America, Latin America, Europe, the Middle East, Africa, and the Asia Pacific. The company offers lithium compounds for use in applications that have specific performance requirements, including battery-grade lithium hydroxide for use in high performance lithium-ion batteries; and butyllithium, which is used in the production of polymers and pharmaceutical products, as well as a range of specialty lithium compounds, including high purity lithium metal, which is used in non-rechargeable batteries and the production of lightweight materials for aerospace applications.
Read More - Current Price
- $16.51
- Consensus Rating
- Reduce
- Ratings Breakdown
- 0 Buy Ratings, 2 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $16.67 (0.9% Upside)
#5 - Lithium Americas (NYSE:LAC)
If the idea that bigger is better is part of your investment philosophy than Lithium Americas (NYSE:LAC) may not be the stock for you. However, if you’re willing to take a ride on the speculative side, this small Canadian miner may be just what you’re looking for.
As stated above, Lithium Americas is a small company (only about $720 million), but the company has an intriguing story that leads back to Tesla. One of the company’s two projects is in Nevada where Tesla has its Gigafactory.
Lithium Americas also has a project in Argentina’s “lithium triangle” and with Tesla becoming actively engaged in the lithium market, there are rumors that Tesla may look to acquire Lithium Americas and integrate it for its battery production plant.
And even that doesn’t happen; it’s likely that the company may become a significant supplier for Tesla. The stock is up nearly 50% since the beginning of the year, and has posted a gain of over 400% in the last 12 months.
About Lithium Americas
Lithium Americas Corp. engages in the exploration and development of lithium properties in the United States and Canada. It holds a 100% interest in the Thacker Pass project located in northern Nevada, as well as investments in exploration properties in the United States and Canada. Lithium Americas Corp.
Read More - Current Price
- $3.66
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $5.63 (53.9% Upside)
#6 - Galaxy Resources (OTCMKTS:GALXF)
If you’re willing to go even more speculative, you should consider Galaxy Resources (OTCMKTS:GALXF). By any definition, GALXF is a penny stock. Often times, penny stocks are that way for a reason. So any investment in Galaxy Resources needs to come with the caveat “let the buyer beware.”
However, like all lithium stocks, Galaxy has received a significant post-election boost. The question now is if they can hold those gains.
The bullish point of view points to the company’s diversified portfolio. Like Lithium Americas, Galaxy has a project in the lithium triangle area of Argentina. The company’s Sal de Vida project is what makes GALXF worth an investor’s time at the moment.
As EV manufacturers move into production mode, they will be paying particular attention to supply chain stability. And that’s another box that Galaxy Resources can check. In addition to its Sal de Vida project, the company has projects in its home country of Australia and Canada.
About Galaxy Resources
Galaxy Resources Ltd. engages in production of lithium concentrate and exploration of mineral properties. It operates through the following segments: Corporate, Australia, Argentina and Canada. The Australia segment includes the development and operation of the Mt Cattlin spodumene mine, and exploration for minerals.
Read More - Current Price
- $3.57
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#7 - American Battery Metals (OTCMKTS:ABML)
The last stock we’ll look at is American Battery Metals (OTCMKTS:ABML). Like Galaxy Resources, American Battery Metals is a penny stock. And like GALXF stock, ABML stock has been on a tear in 2021 charging up 143%.
However, in light of the current speculation going on in the market, it’s important to note that there is a solid growth narrative to support the stock’s surge. In late December, the company made progress on three milestones that puts it on track to opening a pilot lithium-ion battery recycling plant in Fernley, Nevada.
First, it has purchased land. Second, it has secured water rights. And finally it hired a design/build construction firm. This is an interesting development because it will fit the objective of the Biden administration to bring clean energy manufacturing jobs to the United States. And with the company pledging to use a superior process for extracting lithium, there will be keen interest in getting this factory up and running.
About American Battery Technology
American Battery Technology Company, a battery materials company, engages in supplying battery metals. The company explores for resources of battery metals; and develops and commercializes technologies for the extraction of battery metals, as well as commercializes integrated process for the recycling of lithium-ion batteries.
Read More - Current Price
- $9.83
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
The buying case for lithium stocks is not about availability but accessibility. Although lithium is the 33rd most abundant element globally, it’s often in locations that make it hard to access, particularly in enough density to make a production investment worth it.
It’s a complicated, expensive process, and that’s why investors should look at the companies on this list. They have proven abilities to bring the mineral to market either through mining and refining or through battery production.
Patience will be required. Many EV manufacturers are not anticipating having production-ready models available until 2022 at the earliest. But that’s in a perfect world. In the past 18 months, we’ve seen how 5G technology got sidetracked. The overall benefit hasn’t changed, but there was a delay in making it a reality. The same may be true of EVs. Only time will tell.
If you’re wondering how you can invest in lithium in a more passive way, you can look at the Global X Lithium & Battery Tech ETF (NYSEARCA:LIT). The fund has posted a gain of over 137% in the last 12 months. The fund’s objective is to “provide investment results that generally correspond to the price and yield performance of the Solactive Global Lithium index.”
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