With the electric vehicle story showing no signs of cooling, lithium stocks will see big demand.
For one, analysts at Cairn Energy Research Advisors forecast a surge in EV sales in 2021, a countries around the world encourage consumers to buy them. They added that global sales of electric vehicles could jump 36% and top three million vehicles for the first time ever.
Two, up to 40% of General Motors (NYSE:GM) autos will be battery electric vehicles by the end of 2025, according to CEO Mary Barra. Three, according to UBS analysts, EVs could make up nearly half of all new car sales over the next decade.
However, for that to happen, the world must have far more lithium supply.
Unfortunately, lithium producers aren’t prepared for the coming wave of demand. As Forbes contributor Dan Runkevicius notes:
“Since 2018, lithium prices have crashed 60-70% to rock-bottom lows. The drawdown forced miners to cut back on operations and call off the exploration of new mines. And now there’s a very limited number of projects making lithium.”
That’s a massive catalyst for lithium prices and related stocks, including these:
- Global X Lithium & Battery Technology ETF(NYSE:LIT)
- Advanced Battery Metals and Materials ETF (NYSE:BATT)
- Albemarle Corp.(NYSE:ALB)
- Lithium Americas Corp.(NYSE:LAC)
- American Lithium (OTC:LIACF)
Lithium Stocks: Global X Lithium & Battery Technology ETF (LIT)
One of the best ways to diversify your EV portfolio is with an ETF such as LIT. The Global X Lithium & Battery Tech ETF invests in the full lithium cycle, from mining and refining the metal, through battery production, says Global X.
Not only does this ETF give investors exposure to lithium and battery stocks, such as Albemarle, LG Chem, Samsung, Tesla (NASDAQ:TSLA), BYD Co. (OTCMKTS:BYDDF), and Panasonic Corp. (OTCMKTS:PCRFY), it does so at less cost of about $60 a share.
Advanced Battery Metals and Materials ETF (BATT)
The BATT ETF is another way to the trade the EV boom, with exposure to lithium, cobalt, vanadium, graphite, and nickel for example.
Some of its top holdings include Tesla, BYD Company Ltd., LG Chemical Ltd. (OTC:LGCLF), and Nio (NYSE:NIO). All at a cost of about $15 a share.
Plus, according to Amplify ETFs, there’s substantial growth ahead for the lithium-ion battery market. In fact, they say it could grow from $44.2 billion in 2020 to $94.4 billion by 2025, at a compound annual growth rate of 16.4%.
Albemarle Corp. (ALB)
The first time I weighed in on Albemarle, I noted it could run to $100, near term, “given the likelihood of higher demand.” That was on July 21, as ALB traded around $87. But ALB did far better than $100 a share.
In fact, nowadays it’s up to $146 and could run to $180.
All that is thanks to a big wave of demand for lithium supply. Plus, as noted by Albemarle Corp. CEO Kent Masters, as quoted by Bloomberg: “There’s the incentives, and the emphasis that’s put on electrification and EVs around that. The market side of it would be more favorable with (President-elect Joe) Biden.”
Lithium Americas Corp. (LAC)
Lithium Americas Corp. operates as a resource company in the United States, with interests in the Cauchari-Olaroz Project in Jujuy province of Argentina and owns a 100% interest in the Thacker Pass lithium project in northwestern Nevada.
When I last mentioned LAC on July 21, I said it could run to $10, near-term. It’s now up to $11.60 and could easily run higher with lithium demand surging. Helping, Stifel analyst Anoop Prihar just initiated coverage of the LAC stock with a buy rating and a $13.25 price target.
Plus, the company just got final approval for its Nevada lithium project, with full federal permitting expected by early 2021. In addition, according to Reuters, “Lithium Americas has said it plans to spend $400 million on the first phase of its Thacker Pass project with output of 20,000 [metric tons] of lithium annually. The mine is expected to open by 2023.”
American Lithium (LIACF)
Trading near $1 on the over-the-counter market, the LIACF stock offers solid exposure to the lithium craze as well.
The company says it holds “a significant land position” within a four-hour drive of the Tesla Gigafactory. It has more than 4,000 acres near Tonopah, Nevada, which it calls “one of the most promising and underdeveloped lithium sedimentary basins in North America today.”
After running from a January low of just 10 cents to a current price of 95 cents, the stock could see even more upside here. As the lithium story gets stronger, I strongly believe LIACF could break from consolidation near-term to test a July high of $2.19 again.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
