Falling lithium prices have made lithium stocks a poor investment in 2023. That’s to the surprise of many analysts who believed the market for lithium would explode higher. Instead, lithium prices are below their cost of production.
The pace of demand for electric vehicles (EVs) has been slower than expected, so the demand for lithium, a major component in EV batteries, has slowed as well. This is compounded by the fact that many automakers are facing obstacles getting their factories up and running while also struggling with recent labor negotiations.
But the transition to electric vehicles becoming more prevalent is still underway, and that means there will be demand for lithium in the future. Plus, lithium is still a key metal needed in solar, nuclear and other applications, making it a valuable resource for modern day industries.
The good news and the bad news is the same. Many of the top lithium stocks are trading near 52-week lows. However, that creates an opportunity for patient investors to enter or add to their position in a sector that still appears to have a long runway.
Piedmont Lithium (PLL)
Among lithium stocks, Piedmont Lithium (NASDAQ:PLL) is most susceptible to a downturn in lithium prices. Piedmont has major operations in the renowned Carolina Tin-Spodumene Belt in North Carolina which puts it in a position to be one of the world’s largest producers of low-cost lithium hydroxide. The company is in a partnership with Tesla (NASDAQ:TSLA) to deliver approximately 125,000 metric tons of lithium between now and the end of 2025.
Until recently, the company was still in the developmental stage, but that’s starting to change. In its most recent quarter, the company delivered earnings per share () of 88 cents and revenue of just over $47 million. Both numbers were below analysts’ expectations, but the company has still moved from being a developmental stage company to a substantial lithium producer.
That’s why analysts are projecting a 267% increase in the company’s earnings in the next 12 months and a 442% increase in PLL stock in that same timeframe.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) owns several lithium projects in Argentina including the Cauchari-Olaroz lithium brine project which is a joint venture with China’s Ganfeng Lithium (OTCMKTS:GNENF). The project is expected to produce 40,000 tons of lithium carbonate equivalent (LCE) annually. The company also owns the Pasto Grandes lithium brine project which is expected to produce 24,000 tons of LCE per year starting in 2024.
Additionally, Lithium Americas plans to begin mining operations at the lithium-rich Thacker Pass Project which has an after-tax net present value of approximately $5 billion. When fully operational, the project will yield 80,000 tons of LCE per year.
But those operations won’t begin until 2026. Until then, there’s not much data to go on. Nevertheless, analysts are expecting the company to swing into a profit in the next 12 months and are forecasting a 110% increase in the LAC stock price.
Livent (NYSE:LTHM) provides another angle for investing in lithium stocks. The company doesn’t directly mine lithium, but it does produce and sell lithium compounds that are used in a range of products including batteries, pharmaceuticals and polymers.
Unlike the other companies on this list, Livent has a solid track record of delivering revenue and profit. It is expanding its production capabilities with new factories in lithium-rich North Carolina and Argentina.
The company also has an 11-year contract with Ford Motor (NYSE:F). Under terms of that contract, Livent will deliver up to 13,000 metric tons of lithium hydroxide every year. This production will take place from a plant in Quebec, Canada that is in early-stage construction.
Livent missed on its top and bottom lines when it reported earnings in October. However, even with an anticipated 13% drop in earnings in the next 12 months, analysts still project an 84% increase in the LTHM stock price, making it one of the top lithium stocks for investors to consider right now.
On the date of publication, Chris Markoch did not hold (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.