Lithium stocks have suffered tremendously since the late summer. The downturn is the result of many factors. Lithium production has increased dramatically over the past few years. That has introduced a much greater supply and created lower prices. On the demand side, factors have conspired against lithium as well. A weaker economy has lowered EV demand and helped suppress previously strong prices.
Additionally, many firms had piled up large inventories of lithium, which created an overhang of supply. If that weren’t enough, questions about the state of the EV market continue to persist. Fear not, though, EVs have passed the point of no return, and the economy is strengthening. Lithium stocks are a smart contrarian bet to make right now.
Albemarle (NYSE:ALB) has established a position as one of the strongest lithium stocks in the US market. It has also proven to be highly volatile, moving from highs above $285 in 2023 to its current price of $114.
With all that said, there remains a lot to like about Albemarle. For example, look at Albemarle’s third-quarter earnings. The company made $2.3 billion in sales during the period which was still an increase of 10%. Furthermore, Albemarle also predicted that 2023 sales are expected to increase by 30 to 35%.
Those numbers suggest that the markets may simply be overreacting. Lithium is a commodity and commodities are subject to periods of fluctuation that result in strong price swings. Yet, electric vehicles will continue to grow. Lithium prices will inevitably swing in the other direction again. In other words, all investors need to do is make the bet now and be patient.
Albemarle also Has the backing of the Department of Defense and received a grant worth $90 million during the period. Lithium has been designated a critical material by the government, and Albemarle has been earmarked as one of its favored sons. Its place is secure, as are its fortunes.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) website puts it bluntly: Lithium Americas is focused on advancing Thacker Pass to production. For those who don’t know, Thacker Pass is one of the largest lithium deposits globally. Investors who believe in the future of EVs should believe in Thacker Pass and Lithium Americas, by extension.
The company believes in the potential ofso strongly that it recently separated its operations to isolate Thacker Pass. LAC stock Is now fully dependent on the lithium produced from that mine for its future success. It’s also very early in developing lithium Americas Thacker pass operations.
While construction commenced in early 2023, initial production is not expected until late 2026. The flip side of that coin is that those who get in now are setting themselves up for windfall profits in just a few years. Lithium Americas, like Albemarle, has carved out a unique position as a large producer of strategically critical precious metals.
Early returns following the stock separation have not been strong, but those with even the smallest number of shares are bound to see good returns.
Revenues fell by 10% to $211.4 million, 9% lower than a year earlier. Net income fell from $90.2 million to $87.4 million. The relatively small decrease resulted from cost-cutting measures implemented by the firm. That was probably the best fundamental information for investors interested in Livent.
Investors probably don’t care at this point because the most potent catalyst for Livent has to do with other things. The company remains on track to succeed in its merger with Allkem. It has received regulatory approval from all related countries relevant to the deal. The new company will be called Arcadium Lithium and trade on the New York Stock Exchange and in Australia.
On the date of publication, Alex Sirois 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.