As the pressing need for sustainable transportation options fuels demand for electric vehicles, demand for the products that power the cars of the future also continues to grow. One of the most important is lithium, a chemical that serves as one of the key components for rechargeable batteries, a piece that EV manufacturers have struggled to perfect. This increasing market trend has the potential to yield positive results for those who hold lithium stocks.
Lithium Stocks: The New Oil?
As the Wall Street Journal recently noted, “Lithium has a better claim than most commodities to be the ‘new oil.’” The past year has seen sales of electric vehicles increase, in both the U.S. and abroad.
The average price of lithium carbonate, one of the key components needed for the production of rechargeable batteries, has more than doubled this year, as electric vehicle producers such as Tesla (NASDAQ:TSLA and Lucid Motors (NASDAQ:LCID) have continued efforts to increase production.
For lithium producers, this likely means a positive industry outlook. For their shareholders, the potential for growth is strong. In July 2021, InvestorPlace contributor Muslim Farooque predicted soaring demand for lithium stocks. Although he noted that the global Covid-19 pandemic had posed negative effects for the lithium industry as a whole, he added that “the strong uptick in demand for EV batteries will stabilize the price and the lucrativeness of lithium stocks.”
Demand Is Growing, and So Are Lithium Stocks
Almost three months later, it appears as though his predictions were sound. The past month has seen share prices rise consistently for chemical producers whose holdings include lithium. Albemarle (NYSE:ALB), Lithium Americas (NYSE:LAC) and Livent (NYSE:LTHM) have all experienced a five-day high today and have seen shares rise consistently for the past month, increasing by 18%, 56% and 32%, respectively.
Other lithium producers, such as Piedmont Lithium (NASDAQ:PLL) and Sociedad Química y Minera de Chile NYSE:SQM) have enjoyed generally positive months, despite much fluctuations in share prices.
Here Comes the Boom
For anyone whose portfolio includes any lithium stocks, the potential for growth is very good and it is only increasing. For investors looking to board the electric vehicle train, it isn’t too late – EV demand is only increasing. The fine chemical companies producing lithium don’t typically receive as much attention as those turning out the actual cars. And despite the increasing share prices of lithium stocks, some prices are still low enough to justify buying now.
That doesn’t mean that a boom isn’t coming. The EV boom is already here, but it is quite literally powered by the smaller lithium producing companies who often operate away from the spotlight. Now is the time to hold and to buy – and watch as this boom continues. As the Wall Street Journal says, lithium is uniquely positioned to be “the new oil.”
On the date of publication, Samuel O’Brient 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.