Sometimes you get it wrong.
That’s the sentiment many investors may be feeling if they invested in lithium stocks in the last year. You can choose to simply keep them on your watch list for now. However, you can look further at some of the best lithium stocks to buy now. are several reasons why it’s still worth looking for the best.
But first, why is the price of lithium down?
One reason points to the weak economy in China, the leading market for lithium. It’s causing Chinese battery makers to cut back on demand from the country’s lithium producers.
Secondly, the shift toward electric vehicles (EVs) is hitting a plateau. The early adopters have already placed their orders. But for EVs to become more mainstream, more charging infrastructure and battery technology advancements are needed.
For now, the lithium-ion battery is the industry standard. With nearly 5% of worldwide auto sales coming from EVs, a tipping point is being reached in many countries.
That indicates a higher lithium price. Commodity investments are not for every investor. However, if you have a long-term focus and a moderate risk tolerance, consider buying the following three best lithium stocks.
Albemarle (NYSE:ALB) is one of the largest lithium companies by market cap.
Although Albemarle isn’t a pure-play lithium stock, it is the world’s largest lithium miner, with operations in Chile, Australia, and the U.S. The company’s size hasn’t prevented Albemarle from being affected by declining lithium prices. However, it can help take some of the risk off the stock.
ALB stock is down 7.6% in 2023 and down 22.9% year-over-year (YOY). Yet, signs indicate a comeback may be underway. First, ALB stock hit its 52-week low in May. After initially rallying this summer, the stock suffered a recent drop-off. But the stock found support well above the May lows.
Analysts give ALB stock a consensus price target of $261.63, a 30% upside from its current price. And if Albemarle can make good on its increased earnings guidance of $25 to $29.50, that may be a low estimate of the opportunity in one of the best lithium stocks to own.
Piedmont Lithium (PLL)
Piedmont Lithium (NYSE:PLL), because of its value, is the second-best lithium stock to buy in September.
The Inflation Reduction Act of 2022 aims to reward companies moving the lithium supply chain to the U.S. Piedmont is achieving that with its investments in projects in North Carolina and Tennessee. When fully operational, the company projects that it will produce 60,000 metric tons of annual lithium hydroxide production.
The current concern is the timing of these mines’ operations. It could take a while to get fully functional and productive. In the meantime, PLL is a pre-revenue company that is not generating revenue.
However, analysts are forecasting that Piedmont will generate $245 million of revenue from spodumene concentrate sales by the end of this year. Furthermore, it is forecast that revenue will grow at a compound annual growth rate (CAGR) of 39% over the next two years. That would bridge the gap before its domestic projects begin delivering revenue in 2026 or 2027.
There’s risk in PLL stock for sure, which is reflected in the high short interest in the stock. But with an $866 million market cap, this is a lithium stock with significant upside.
Livent (NYSE:LTHM) is the best-performing stock on this list.
LTHM stock is up 9% in 2023 yet down nearly 29% YOY. It’s also down 13% in the last month. That’s likely a reaction to the company’s most recent earnings report, in which it missed on the top line by over $20 million (nearly 10%).
That’s been enough to cause several analysts to lower their price targets for Livent stock. However, it’s notable that no analysts were downgrading the stock itself. In fact, 19 out of 15 analysts give the stock either a “Strong Buy” or “Buy” rating.
LTHM stock hit its 52-week low in January 2023. Since then, the stock has tested that low several times, and each time, the stock has found support well above that level. With lithium prices expected to rise, and the company’s existing agreement with Ford Motor (NYSE:F), Livent is a lithium stock to watch closely.
On the date of publication, Chris Markoch 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.