3 Lithium Stocks to Buy on the Dip: May 2024


  • Investors looking for exposure to the lithium market should place their high conviction in these 3 stocks.
  • Lithium Americas (LAC): The Thacker Pass continues to hold long-term opportunities despite short-term demand headwinds.
  • Sigma Lithium (SGML): The miner announced the reserve balance for its Grota do Cirilo mine has grown 40%. 
  • Ganfeng Lithium Group (GNENF): Ganfeng’s weight in the global lithium market should not be underestimated. 
Lithium Stocks to Buy on the Dip - 3 Lithium Stocks to Buy on the Dip: May 2024

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The U.S. stock market is enjoying a rally after positive economic data from the Bureau of Labor Statistics. The April consumer price index (CPI) figures showed inflation cooling for the first time in 6 months, which has signaled to investors inflation will likely start to trend downward. The April CPI report is good news for Federal Reserve officials, but market participants should not take it as some kind of certainty that we’ll get rate cuts anytime soon. The Fed will continue with its wait-and-see approach. Meanwhile, U.S. equities have largely rallied in recent weeks. Not all sectors, such as lithium stocks, are enjoying the rise in prices and there are now several which seem like good candidates to buy on the dip.

Electric vehicles (EV) stocks and their lithium counterparts are still underperforming the market by a sizable margin. Nevertheless, the lack of consumer demand for EVs will not last forever, especially as consumer confidence improves over the next few quarters. With that said, these are three lithium stocks to buy on the dip.

Lithium Americas (LAC)

smartphone with logo of Canadian company Lithium Americas Corp on screen
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Lithium Americas (NYSE:LAC) is the North American unit of what was once a larger lithium miner. After a restructuring which saw the parent company split its Argentine assets from its North American ones, in effect creating two independent public companies. As a result, Lithium Americas has enjoyed better strategic focus.

For those who don’t know, Lithium Americas’ largest project is the Thacker Pass, which is a lithium mine located in Humboldt County, Nevada. Phase I of the project will produce some 40,000 tons of lithium carbonate per year, while phase II will see that yearly figure double. General Motors (NYSE:GM) will have exclusive rights to all of what is produced from phase I for roughly 10 years.

A recent $2.26 billion Department of Energy loan to finish the construction of the Thacker Pass facilities should get investors optimistic about the prospects of the project.

Sigma Lithium (SGML)

a lithium mine, ATLX stock. Lithium Stocks to Buy
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Sigma Lithium (NASDAQ:SGML) is a North America-headquartered miner whose operations are based in Brazil. The miner has 100% ownership of the Grota do Cirilo mining operation, located in Minas Gerais, Brazil. The mineral deposits in this location include hard rock spodumene, which is a mineral with a high concentration of lithium. Phase I of this mining project will produce around 270,000 tons of lithium concentrate per year, while phases II and III will triple Sigma’s annual production to 766,000 tons.

Recent news regarding the mine’s reserve balance is definitely exciting. In early May, Sigma Lithium announced the balance had grown 40% from 54.8 million tons to 77 million tons, growing the miner’s future opportunity set.

SGML shares have plummeted more than 41% on a year-to-date basis, but this, in turn, creates an opportunity for investors who want to bet on the miner’s significant lithium production operation.

Ganfeng Lithium Group (GNENF)

Person holding mobile phone with logo of Chinese company Jiangxi Ganfeng Lithium Co. Ltd. (GNENF) on screen in front of web page. Focus on phone display. Unmodified photo.
Source: T. Schneider / Shutterstock.com

The final lithium miner to make this “buy” list is China-based mining giant, Ganfeng Lithium Group (OTCMKTS:GNENF). Unfortunately, since lithium prices began to slump, Ganfeng has felt the brunt of the losses. The lithium miner posted a 76% drop in profits in 2023 due to lower lithium prices on the open market. Everything from a lack of demand to high supply have kept lithium prices low for almost the past two years.

Despite a market slump for lithium carbonate, investors should not underestimate Ganfeng’s weight in the space. The miner happens to be the third largest in the world, with operations in Asia, Australia, Africa, North America, South America and Europe. Better macroeconomic conditions for EVs will help breathe life into lithium prices, which will ultimately benefit large players like Ganfeng Lithium.

On the date of publication, Tyrik Torres 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.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

Article printed from InvestorPlace Media, https://investorplace.com/2024/05/3-lithium-stocks-to-buy-on-the-dip-may-2024/.

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