Goldman Sachs just made lithium stocks even more attractive.
Just days ago, the firm said that lithium prices could fall about 10% this year, and as much as 73% next year. But they’re wrong. For one, as noted by Bloomberg, “Benchmark disputes Goldman’s forecast that a flood of new production is on its way, and that prices will crater as a result.” Benchmark also says the lithium market will remain short until 2025.
Moreover, Bloomberg also noted that “Matt Fernley, the London-based managing director at Battery Materials Review, an industry researcher, said the sell side reports are ‘massively over-estimating’ the ease of adding new supply, and failing to consider the complexity of bringing new assets into production and the qualification requirements.”
Meanwhile, Time Magazine contributor Emily Barone added that “[w]hile the Earth has plenty of lithium to go around, the supply needs to be extracted from brine pools and underground reserves, and current mining operations aren’t sufficient to keep up with the auto industry’s growing needs.”
So, if you believe lithium prices are coming down soon, I have a bridge to sell you. With significant demand and little supply, prices won’t come down soon. I’m honestly not sure what Goldman Sachs was thinking. But we should thank the firm for making lithium stocks even more attractive than before.
Therefore, let’s take a closer look at seven lithium stocks for investors to consider right now.
|LIT||Global X Lithium & Battery Tech ETF||$75.80|
|BATT||Amplify Lithium & Battery Technology ETF||$15.36|
Lithium Stocks: Lithium Americas (LAC)
Over the past month, Lithium Americas (NYSE:LAC) stock has fallen more than 13% to just under $22 per share, where it’s now oversold.
That said, from current prices, I’d like to see it rally back to about $32 in the long term. Helping the cause is the fact that at its Thacker Pass mine, results of a Feasibility Study on the first phase of Thacker Pass now expects an an increased initial capacity of 40,000 tpa of lithium carbonate. This is up from the previously expected figure of at least 30,000-35,000 tpa of lithium carbonate.
Also, in April, Deutsche Bank analyst Corinne Blanchar raised the firm’s price target to $40 from $34, with a “Buy” rating. She believes lithium producers are well positioned with pricing improving. And with all of this combined, LAC stock looks like one of the top lithium stocks to consider.
Standard Lithium (SLI)
Since the beginning of June, Standard Lithium (NYSEAMERICAN:SLI) slipped from just above $6 to now sitting at $4.71 per share. That said, from current prices, I’d like to see the stock retest $5.50 in the near term.
At the moment, Standard Lithium is working on a 3.14 tonne LCE Indicated Resource, a 150,000-acre joint venture Lanxess Project in Arkansas. “The region is home to North America’s largest brine production fairway with over five decades of commercial production, significant infrastructure, abundant low-cost electricity, access to chemical reagents and water sources. The project is already permitted for extensive brine extraction and processing activities,” the company said.
Furthermore, in the past seven month, three analsysts have reiterated “Buy” ratings on SLI stock. In terms of price targets, the trio of analysts’ estimates range from a low of 13 CAD per share and 14.28 CAD per share.
Thus, investors should pay closer attention to SLI stock moving forward.
Lithium Stocks: Livent Corp. (LTHM)
Another solid lithium stock to consider is Livent Corp. (NYSE:LTHM), a pure play lithium producer. After dropping from about $34.61 at the end of May to a low of $21.71, LTHM stock became oversold. That said, from current prices, I’d like to see the stock retest at least $31 per share in the near term.
Right now, the company has 16 offices or manufacturing facilities across the world — including its “largest and most diverse manufacturing facility” in North Carolina. It will also soon start phase two of its carbonate expansion in Argentina, with commercial production expected to begin by 2023.
Furthermore, earnings are impressive, too. For the first quarter of 2022, company revenues were up 17% quarter-over-quarter (QOQ) to $143.5 million. Year-over-year (YOY), revenue was up 56%. Also, GAAP net income was 609% higher quarter over quarter at $53.2 million.
In other words, this is a strong company in a growing industry. And that could mean good things for investors looking for lithium stocks to buy.
Global X Lithium & Battery Tech ETF (LIT)
One of my favorite ways to trade any hot sector is with an ETF, such as the Global X Lithium & Battery Tech ETF (NYSEARCA:LIT).
Not only does this ETF offer great diversification, but it also does so at a lower cost. At $75.62 per share, and with an expense ratio of 0.75%, the LIT ETF offers exposure to stocks, such as Albemarle (NYSE:ALB), BYD Co. (OTC:BYDDY), LG Chem (OTC:LGCLF), Tesla (NASDAQ:TSLA), Livent Corp., Lithium Americas Corp., Quantumscape Corp. (NYSE:QS) and Piedmont Lithium (NASDAQ:PLL) to name a few.
After slipping from about $80 back in early April to its current levels, I’d like to see the LIT ETF eventually retest $79 in the near term. At a lower price now, though, investors could take advantage.
Lithium Stocks: Amplify Lithium & Battery Technology ETF (BATT)
Another solid ETF to consider is the Amplify Advanced Lithium & Battery Technology ETF (NYSEARCA:BATT).
At $15.33, with an expense ratio of 0.59%, BATT offers exposure to companies involved in battery storage, battery metals and materials and EVs. Some of its top holdings include Tesla, Glencore PLC (OTCMKTS:GLNCY), Nio Inc. (NYSE:NIO), Li Auto Inc. (NASDAQ:LI) and LG Chem to name a few.
Since early June, the ETF slipped from about $16 per share to $14.19 per share. From here, I’d like to eventually see the BATT ETF retest a $18 high from early April.
Albemarle Corp. (ALB)
Albemarle, the 800 lb. gorilla in the lithium space, has been beaten silly. Since topping out around $273, ALB stock dropped to a low of $198. Now, it’s technically oversold and may be overdue for a pivot higher. And from current prices, I’d like to see ALB retest $270 shortly.
In May, the company boosted its guidance for the second time for the full year. It now expects 2022 sales to come in between $5.8 billion and $6.2 billion. Adjusted EBITDA is expected to come in between $2.2 billion and $2.5 billion. And adjusted earnings per share (EPS) is expected to fall in between a range of $12.30 and $15.
“Over the past 12 months, we’ve made significant progress in renegotiating more variable-priced contracts with our lithium customers. Implementation of these contracts is a key driver of the expected year-over-year improvement in our financial results,” CEO Kent Masters said. “We now expect full-year 2022 adjusted EBITDA to be up more than 160% from prior year based on favorable market dynamics for our Lithium and Bromine businesses.”
Overall, this is a great sign for Albemarle. And thus, is a good sign for ALB stock investors, as well as potential investors of lithium stocks.
Lithium Stocks: Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) fell from a high of about $67.50 to $47.50, where it’s starting to pivot higher. From current prices, I’d like to see the PLL stock rally back to $67.50. Helping, the company’s partner Sayona Mining recently posted positive study results for a North American lithium mine restart. According to a company press release, the study estimates annual production of about 168,000 tonnes per year of 6% spodumene concentrate over a 27 year period.
Also, in late May, Cowen analyst David Deckelbaum initiated coverage of the PLL stock with an “Outperfom” rating, with a $90 price target.
According to the analyst, “Piedmont is underappreciated for its near-term spodumene projects in Quebec and Ghana, which give it price advantaged feedstock towards a vertically integrated lithium hydroxide conversion strategy, while its flagship Carolina Lithium project adds further upside beyond 2025,” as quoted by TheFly.com.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.