2022 proved to be tumultuous for several industries, but 2023 has been off to a good start and with inflation finally cooling down, it looks like there is light at the end of the tunnel for investors to capture high return mining stocks. Mining companies have been making investments and acquisitions knowing that whatever the turbulence they face, the energy demand will continue to remain. This is where high potential mining stocks come into play.
When it comes to mining industries, they are aware that there is always an imbalance in demand and supply and this is what makes the industries tick. There is high demand due to the EV supply chain and lithium has turned out to be the big winner in 2023. Anything related to the EV industry is where the opportunities lay and there are several mining stocks striking gold. While gold remains an unbeatable investment, lithium mining companies are striking gold with their assets. With that in mind, let’s take a look at the three of the high return mining stocks.
Barrick Gold (GOLD)
Barrick Gold (NYSE:GOLD) is a high return mining stock. Gold prices have soared to record highs this year due to inflation. This situation presents a profitable opportunity.
Currently, Barrick Gold’s shares are trading at a discount due to missed earnings expectations. There is uncertainty about the economy’s future. Concerns about a potential recession also exist. These factors continue to affect the gold price. Gold is currently nearing $2,000 an ounce. This situation will likely benefit Barrick Gold’s stock. Today, the stock trades at $17. Over the past year, it has dropped by 17%. Despite this, Barrick Gold remains a top gold mining stock.
In the first-quarter results, the company reported a 73% drop in profit as compared to the previous year. It made a profit of $120 million and the drop wasn’t due to the price of gold but because of the company’s issues with overseas operations. The only reason to invest in this company now is to benefit from the rising price of gold. Its average realized gold price in the first quarter went up to $1,902 per ounce from $1,876 the previous year.
It did face a few challenges in 2022 but has remained relevant. Another reason to bet on the company is its asset advantage. Barrick Gold held 76 million ounces in gold reserves at the end of 2022 and this allows the company to generate cash flow year after year. Its partnership with Newmont Gold (NYSE:NEM) in the Nevada Gold Mines could lead to massive gains in the long term.
Lithium Americas (LAC)
Another one of my favorite mining stocks, Lithium Americas (NYSE:LAC) has a solid growth opportunity. It operates lithium mine sites in South Dakota and North Carolina and is one of the top producers in the U.S.
Even though the company is non-producing and the stock is down, it looks attractive for multiple catalysts. Its $4 billion lithium mine in Argentina is expected to begin production this year while work on the Thacker Pass project has already commenced. Automaker General Motors (NYSE:GM) has also invested $630 million in the company. This means the company doesn’t need to worry about liquidity in the near term and has enough funds to keep the current projects running.
Lithium Americas is set to benefit from the transition to electric vehicles (EVs). As companies move towards vehicle electrification, it will lead to a rise in lithium stocks. While the company doesn’t generate any revenue right now, it is building lithium extraction sites which will bring in money in the long term.
Once the assets are ready for production, there is a lot of room to grow. It recently approved an agreement to separate its two lithium companies Lithium Argentina and Lithium Americas. Once this separation is completed, Lithium Americas will start to shine but LAC stock may not be this cheap then. This early production ramp-up stage is an ideal time to get in as the company cements its position as a lithium producer this year.
We cannot talk about mining stocks without mentioning Albemarle (NYSE:ALB). Albemarle is focused on signing projects aimed at boosting its capacity. ALB is one of the best high return mining stocks in the industry.
It has been signing agreements with some of the top automakers and recently signed an agreement to supply Ford Motors (NYSE:F) with battery-grade lithium. It is a five-year supply agreement that begins in 2026 and goes through 2030. ALB stock is trading at $203 today and is down 26% in the past six months. The company had gained over 400% since March 2020 but started to drop in November 2022 after the lithium market dropped. The current pullback from the highs is an ideal opportunity for investors to get the stock. It is one of the best mining stocks for profits.
Several catalysts are working for the company. It also aims to produce battery-grade lithium of 50,000 metric tons to help produce over 2 million EVs each year. Its La Negra III/IV expansion in Chile is helping with higher volumes to meet the rising customer demand. The company has also acquired the Qinzhou plant in China which will also boost the conversion capacity and lead to higher lithium volumes.
On the date of publication, Vandita Jadeja 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.