Excessive fear has created substantial opportunities in lithium stocks. And it’s time to get greedy, as Warren Buffett would advise. After considerable downside on lithium supply issues, many of the top lithium stocks are starting to come back strong, with producers still bullish.
Better, as noted by Reuters, “In calls with investors and analysts in recent days, lithium producers said they saw the market volatility as short term, adding that they expect electrification to keep growing.”
That being said, investors may want to buy these lithium stocks.
Albemarle (ALB)
Lithium’s 800-pound gorilla, Albemarle (NYSE:ALB), is showing signs of life again. After slipping from a high of about $240 to a low of $110, ALB is back up to $144.48. From here, if ALB can break above resistance at $153, it could refill its bearish gap around $170 shortly.
Bank of America upgraded ALB to a neutral rating, noting the stock is currently undervalued. Last checked, ALB is trading at less than 10x expected earnings, 1.7x sales, and nearly half of growth.
In short, ALB offers solid growth potential on the cheap, with a yield of 1.11% to boot. Consider that the pullback in lithium prices is only a temporary issue. Once lithium prices recover, ALB should push aggressively higher.
Sociedad Quimica y Minera (SQM)
Sociedad Quimica y Minera (NYSE:SQM), which I recently mentioned, traded at $60.14. From here, as I also noted, I’d like to see it closer to $72 near term. Plus, as we wait for that to potentially happen, we can collect SQM’s current yield of 8.35%.
Earnings weren’t so hot recently, with SQM posting lower-than-expected revenue and earnings. Revenue slipped 38% year over year to $1.84 billion. Net income came in 56% lower year over year to $479.9 million, as EPS crumbled 56% to $1.68 year over year. The good news is most of that earnings negativity has been priced into the stock. Lithium stocks, like SQM, should also recover even more lost ground as lithium prices begin to recover.
Sprott Lithium Miners ETF (LITP)
Or, you can always invest in an ETF for diversification at a low cost. For example, the Sprott Lithium Miners ETF (NASDAQ:LITP). With an expense ratio of 0.65%, the ETF has 49 holdings and trades for just over $12.57 a share.
While the ETF struggled for much of 2023, that’s to be expected when other lithium stocks are falling out of the sky. However, with many names starting to recover, so is the LITP ETF. In fact, since early December, the ETF ran from about $10 to $12.56. With a good deal of patience and growing demand for lithium, it will eventually come back even stronger.
Some of its top holdings include Albemarle, Livent Corp. (NYSE:LTHM), Lithium Americas (NYSE:LAC), American Lithium (NASDAQ:AMLI) and Ganfeng Lithium (OTCMKTS:GNENF) to name a few.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
