The rise of electric vehicles and the world’s transition away from fossil fuels has led to the rise of top lithium stocks for wealth. It’s clear that the energy transition is just getting started. We’re far behind on our climate goals and the issue of global warming has taken the center of many government’s policies.
Although the broader indices may be in the process of making a pull back, with the S&P 500 trading slightly downwards over the past five days, the potential of these stocks should not be discounted. In fact, cheaper stock prices may create very attractive entries for investors who have solid investment theses.
So here are the top lithium stocks for wealth that may be nearing ideal buying zones in August.
Livent Corporation (LTHM)
Livent Corporation (NYES:LTHM) is a U.S.-based company that produces and sells lithium hydroxide, lithium carbonate and other lithium compounds. With mining operations in Argentina and Canada, Livent serves industries like battery manufacturing, automotive, aerospace, energy storage and pharmaceuticals. The company’s revenue was $813 million with a net income of $273 million in 2022.
LTHM stock, with operations across North America, South America, Europe, Asia and Australia, has strategically aligned itself with major EV manufacturers like Tesla (NASDAQ:TSLA) and Bayerische Motoren Werke (OTCMKTS:BMWYY), or BMW, through long-term supply agreements. The company’s impressive YoY revenue growth of 93% and net margin of 34%, coupled with its focus on high-purity lithium hydroxide make it one of those top lithium stocks for wealth building.
There’s some evidence that the market may be selling off the stock irrationally. The company recently beat Wall Street’s earnings expectations last quarter and was met with a discount in its share price. Furthermore, management still thinks that this year will be a strong one, positioning it for immediate growth.
Albemarle (NYSE:ALB) mines, develops and manufactures specialty chemicals, including lithium mining operations primarily in Chile. In 2022, the company generated $7.3 billion in revenue and $2.7 billion in net income.
Albemarle Corporation, resilient to political risks in Chile and trading at an attractive 7.5x earnings, stands as a robust investment opportunity in the lithium market. Its strong financials and valuation are two great reasons to add it to your portfolio in August.
For those with a rosy outlook on the future of lithium stocks, a buying opportunity may be on the horizon. ALB stock exceeded Q1 earnings expectations but cut its full-year outlook due to slumping lithium prices. Therefore, this pick is more sensitive than others to the changing spot prices of the metal.
Whether this sensitivity is a good or bad thing depends on your point of view. On one hand, it may be more volatile with severe drawdowns. This is seen with its 5-year beta standing at 1.55. On the other hand, it may open up opportunities for investors to buy more shares.
Sociedad Quimica y Minera de Chile (SQM)
Sociedad Quimica y Minera de Chile (NYSE:SQM) is a Chilean company that produces and sells specialty chemicals, including lithium. It’s the second-largest producer of lithium in the world, with operations in Chile and Argentina. SQM reported revenue of $10.7 billion and net income of $3.9 billion in 2022.
SQM stock, boasting one of the world’s largest and richest salt flats at Salar de Atacama, has demonstrated great performance with YoY revenue growth of 274% and a net income margin of 36%. With the potential nationalization of the mining sector in Chile falling short, the timing appears favorable for investing in SQM’s shares.
Like most other lithium stocks, SQM has been in a free fall since the end of July. But things are changing on the daily charts. Its momentum is returning to the upside, and looks to be reverting back to its long-term support it has held since May this year. All in all, it’s one of those top lithium stocks for wealth you should buy in August, or at least keep on your watchlist.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.