To be quite blunt, the bird’s-eye-view narrative of lithium stocks to make you rich practically sells itself. While gold may continue to be the monetary precious metal of choice, the commodity of the future increasingly looks like it will be lithium. Powering everything from portable smart devices to full-sized electric vehicles, demand for the soft, silvery-white metal will likely skyrocket.
That’s not just an assertion pulled out of thin air. According to Grand View Research, the global lithium market reached a valuation of $7.49 billion last year. Further, experts project that the sector will expand at a compound annual growth rate (CAGR) of 12.3% from 2023 to 2030. At the culmination of the forecast period, the industry should print revenue of $18.99 billion.
And that assessment could be conservative, depending on how factors such as the EV rollout materialize. Also, some lithium players may accelerate much quicker than others. Below are the riskiest (but potentially the most rewarding) lithium stocks to make you rich.
Sigma Lithium (SGML)
Headquartered in Vancouver, British Columbia, Canada Sigma Lithium (NASDAQ:SGML) is one of the more intriguing but also contentious names among lithium stocks to make you rich. On surface level, its focus on high-purity green and sustainable lithium seems extraordinarily relevant. Unfortunately, its C-suite shakeup – amid some ugly details listed by Reuters – weaves an unconvincing tale for many investors.
Listen, I’m not asking you to view SGML through rose-tinted glasses. However, it also wouldn’t be appropriate to say that SGML completely lacks upside possibilities. Namely, I’m looking at Sigma Lithium’s implied volatility (IV) curve. In the far out-the-money (OTM) put direction, IV comes in at 191%. On the far OTM call direction, IV peaks at 201%.
What we have here is a bottom of the ninth inning with two outs and a runner on third. The pitcher needs to get one more out but the batter just needs to get a clean hit. Ever so slightly, there’s a chance that the bulls could win out. That’s why some speculators have recently bought $40 calls. Sure enough, analysts see SGML hitting $47.74, implying 72% upside potential. It’s high risk but also high reward.
Piedmont Lithium (PLL)
An Australian mining firm, Piedmont Lithium (NASDAQ:PLL) focuses on the process of proving economic mineral recovery of lithium in Gaston County, North Carolina. Ultimately, it seeks to usher in an era of net-zero carbon emission mobility. However, as with many other incredibly risky lithium stocks to make you rich, the market just doesn’t see the narrative. Since January start, it’s down more than 19%.
Frankly, as a high-stakes wager, Piedmont simply lacks certain financial strengths. On the other hand, the IV curve suggests at least the possibility of reward. Again, we have a dichotomy. Peak IV for far OTM puts stands at 133%. For OTM calls, it’s 135%. Like I said, it’s a two-out, bottom of the ninth situation where the pitcher just needs one more strikeout and the batter just needs one more hit.
Given the IV curve, the bulls may have a slight edge. Turning to options flow or big block trades, an institutional trader appears to be egging on speculators by writing 762 contracts of the Nov 17 ’23 85.00 call. However, analysts believe PLL can actually hit $90, a nearly 161% growth trajectory. So, the bulls just might get the last laugh.
Standard Lithium (SLI)
Perhaps the riskiest idea on this list of lithium stocks to make you rich, Standard Lithium (NYSEAMERICAN:SLI) isn’t for the faint of heart. Since the start of the year, SLI lost almost 16% of equity value. However, it’s the negative acceleration that has been terribly severe. In the trailing five sessions, SLI dropped nearly 17%. Therefore, this Vancouver, B.C.-based lithium extraction specialist suffers a credibility crisis.
To be sure, the financials don’t provide much confidence. Aside from solid strengths in the balance sheet, stats such as a deeply negative long-term EBITDA growth rate do not offer encouragement. That said, the options market might provide some hope for gamblers. Notably, the IV rises from lower strike prices to higher, peaking at 247% at the $7.50 strike.
Of course, we’re talking limited volume levels so you should avoid reading too much into the IV curve. Nevertheless, looking at options flow, speculators last month bought 505 contracts of the Jan 19 ’24 5.00 call. Even better, analysts believe that SLI will eventually land at $7.05, implying 195% upside potential.
On the date of publication, Josh Enomoto 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.
