Though it is used for various purposes, lithium is desired most for its effectiveness in rechargeable batteries. In fact, the soft metal is used in batteries for many electronic devices, including mobile phones, tablets and laptops. However, its use in electric vehicle (EV) batteries is what has gotten lithium so much attention recently. With the worldwide EV market expected to grow at a rate of 29% over the next 10 years, lithium stocks are set for major gains.
Make no mistake: lithium batteries are the dominant technology for EVs right now. The production of batteries encompasses an entire ecosystem of lithium miners and battery manufacturers. Therefore, investors must look for the best upstream and downstream companies to maximize their gains.
So, where should you start? Here’s a look at the best lithium stocks currently on the market.
- Lithium Americas (NYSE:LAC)
- Livent (NYSE:LTHM)
- Albemarle (NYSE:ALB)
- Piedmont Lithium Limited (NASDAQ:PLL)
- Energizer Holdings (NYSE:ENR)
- Sociedad Química y Minera (NYSE:SQM)
- Orocobre (OTCMKTS:OROCF)
Lithium Stocks To Buy: Lithium Americas (LAC)
Lithium Americas is a Canadian lithium mining company with an exciting 2021 on the horizon.
Why? The company is currently developing two lithium projects: Cauchari-Olaroz in Argentina and Thacker Pass in the state of Nevada. Production in its Argentinian mine will begin this year and the Nevada location will follow suit in 2022.
The big positive for LAC, though, is that the company is working with Chinse-lithium manufacturing giant Ganfeng (OTCMKTS:GNENF) to bring its Argentinian project online. Ganfeng will be a part-owner of the mine. Therefore, 2021 could potentially be a breakout year for LAC stock.
The Cauchari-Olaroz mine is ” expected to produce 40,000 tonnes per year of lithium carbonate equivalent (LCE).” This is a step-up from the company’s original expectations of 25,000 tonnes. On the flip side, the company did slash production goals for its Nevada mine. However, it has secured funding for Thacker Pass, raising $400 million through an at-the-market offering.
So, with support from Ganfeng and newly mustered funds, this name has immense potential to become a significant player among the lithium stocks.
Livent is a lithium producer based in the U.S. that focuses primarily on the production of lithium hydroxide. It currently owns just one mine in Argentina, which produces up to “25,000 metric tons of lithium hydroxide each year.” That output puts the company in the top five producers of lithium hydroxide.
Perhaps what makes Livent more compelling, though, is that it is a key supplier of EV giant Tesla (NASDAQ:TSLA). That partnership should continue beyond 2021. With about 95% growth in LTHM stock over the past year, this company is one of the biggest gainers when it comes to lithium stocks
But that’s not all. Livent has also been setting up the groundwork for expansion in the past few quarters. For example, it recently acquired part ownership of Nemaska Lithium, a bankrupt lithium miner with a huge mine. That partial-acquisition will help expand the company’s presence in various North American and European markets.
All said, Livent’s recent strategic investments and connection to Tesla make it well-positioned to take advantage of growing lithium demand.
Next on my list of lithium stocks is a company called Albemarle. Shares of this specialty chemicals giant are up more than 65% in the past year.
Despite the challenges presented by the pandemic, the large lithium producer has weathered the storm convincingly. For instance, the company’s earnings results have been impressive, with strong operating cash flow growth. As such, ALB stock is poised to benefit from the expected surge in lithium demand.
One of the strongest qualities of this company is its diversity of activities. Albemarle’s profitable lithium segment has its catalysts, but the company’s bromine segment is also able to cushion any temporary losses. Therefore, ALB has effectively shielded itself from price volatility in the lithium market.
Preliminary fourth-quarter results are expected to beat analyst estimates by considerable margins. Moreover, the company also expects to do significantly better in 2021 because of the continued economic recovery we will experience.
Piedmont Lithium Limited (PLL)
Australian lithium miner Piedmont Lithium has seen its shares skyrocket in the past year, growing by more than 530%. The company first shot to fame when it announced an agreement with Tesla to supply about 33% of its proposed 160,000 tonne output from its mine in North Carolina.
But that’s not the only thing that makes this company promising. In addition to the Tesla agreement, Piedmont Lithium has also signed a deal with Sayona Mining (OTCMKTS:DMNXF) to expand its productive capacity and outreach. So, despite PLL stock being a bit over-priced, it has tremendous potential to become a juggernaut in the lithium business over the coming years.
Currently in the exploratory stage, Piedmont is targeting an output of 22,700 tonnes of “battery-quality lithium hydroxide.” With the lithium hydroxide price around $9,000 per tonne, we could be looking at roughly $2 billion from a year’s operations. If everything goes to plan, the company could fulfill its vision by 2022 and become a major player among the lithium stocks
Energizer Holdings (ENR)
Energizer Holdings is a U.S. manufacturer of primary batteries under its brands, Energizer and Eveready. It produces various batteries using different metals, including zinc, lithium and others. The company has also had a solid track record of increasing its revenues. As such, ENR stock is one of the strongest, low-risk lithium stocks currently on the market.
Energizer beat analyst estimates for its revenues and earnings in its past couple of quarters. Revenues in its most recent quarter were at $848 million, representing 15% year-over-year (YOY) growth. Earnings have been a concern due to the company’s high debt load, but they rose 98% from the previous quarter. That was an increase from its prior, disappointing earnings per share (EPS) of 59 cents to a much healther $1.17.
On top of this, the company has done incredibly well in optimizing its factories to improve efficiency. It has also done well to diversify its business through strategic acquisitions of companies like Auto Care and Battery. So, with an established consumer battery business, ENR has a strong base to make major moves in the auto-battery industry.
Sociedad Química y Minera (SQM)
Next up on my list of lithium stocks is Sociedad Química y Minera, a Chilean commodities producer with plant nutrients and lithium forming a sizeable chunk of its revenues. In fact, the company’s lithium business is currently one its most profitable segments, contributing roughly 30% of total revenues.
That said, SQM’s earnings have taken a substantial hit due to the pandemic and its crippling impact in its home country. Despite these challenges, though, the company has done relatively well in dealing with the downturn. Now, SQM stock is poised to turn things around this year.
For example, earnings results showed signs of improvement in the third quarter. Revenues of $452.9 million came in about 4% lower YOY, but SQM also sold over “17,700 metric tons” of lithium, up significantly from the same period last year. Moreover, the company expects to move forward with its $1.3 billion investment plan in 2024. The goal is to take its lithium carbonate capacity to 120,000 tons by the end of this year. Additionally, the company will also be increasing its hydroxide capacity to 21,500 metric tons. Therefore, the company’s resilience is likely to pay dividends as its lithium supply picks up.
Last on this list, Orocobre is an Australian mineral resource company that mines lithium and other minerals in Argentina. Its Olaroz Lithium Facility is its flagship project, located in the Argentinian region known as the “lithium triangle.” In the past three months, OROCF stock has gained over 51%, reflecting its strong growth prospects.
Like many companies, Orocobre had a tough time during the pandemic. However, its most recent quarterly results suggest that things are normalizing again. For instance, its Olaroz project posted record sales volume and returned to being gross cash margin positive in the December quarter. Sales volume was up 28% from the previous quarter to a record 4,345 tons. Likewise, revenue was up 57% to $16.5 million.
Growth prospects remain robust for this company. For instance, its partnership with Toyota Tsusho (OTCMKTS:TYHOF) looks interesting, with both companies looking to expand the Olaroz facility and work on other vital projects. One of those projects involves the development of a lithium hydroxide plant in Naraha, Japan. These efforts could provide significant runway for OROCF to grow in-line with the other lithium stocks
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.