The U.S. stock market has been quite volatile this year. For certain sectors including AI stocks and other high-growth industries, it has been quite a stellar few months. However, for other sectors, including the likes of EV and lithium stocks, it has been anything but.

The thing is, companies operating in these sectors have benefited from years of tailwinds that have pushed their valuations higher. At current levels, investors are now digesting whether these longer-term tailwinds are enough to propel even more growth moving forward. In other words, it’s a question of how much is priced into these stocks relative to their ability to outperform.

I’m of the view that lithium stocks are likely to benefit from tailwinds that could have a much longer runway than many think. Accordingly, here are three of my top picks I think will benefit from lithium prices stabilizing this year.

Albemarle (ALB)

Albemarle (NYSE:ALB) is among the biggest lithium producers in the world and is largely viewed as a top way to play this trend. Unfortunately, ALB stock declined nearly 33% in 2023, and is currently down more than 11% on the year.

That said, Albemarle has been making a move higher. The company did note a steep revenue decline. However, in Albemarle’s most recent earnings call, the company noted optimism around longer-term demand for lithium. Energy storage needs and increased electric mobility are contributing to these trends.

As investors pile into companies with robust demand, Albemarle should continue to be one of the winners to own during this cycle. The company’s management team has achieved more than $90 million in cost savings this quarter, aiming for $280 million yearly. Additionally, Albemarle’s lithium volumes continue to grow with projects like Kemerton I and Meishan.

For those looking for a top lithium stock to buy for these growth prospects (and a newly-announced 40-cent quarterly dividend), buy ALB stock on the dips.

Global X Lithium & Battery Tech ETF (LIT)

Or, for investors looking for more broad and diversified exposure to lithium trends, there’s always the option of investing in an exchange-traded fund (ETF) tracking this sector. The Global X Lithium & Battery Tech ETF (NYSEARCA:LIT) remains one of my top picks for investors looking to play this trend more broadly.

I like this ETF because it not only includes the likes of Albemarle and other top lithium producers, but battery makers and those involved in the production of key technology using lithium. Indeed, such a broad perspective is one that’s likely to be more beneficial to investors, if one truly believes in the long-term tailwinds behind the lithium space.

The fund is currently down on the year, and like most lithium stocks, it has seen outflows as investors reposition their portfolios toward other trends (like AI). But I think over the long-term, institutional money managers and investors will need to have exposure to this trend. So this ETF makes a lot of sense for passive and active investors alike.

Surge Battery Metals (NILIF)

Surge Battery Metals (OTCMKTS:NILIF) is among my top picks for investors seeking more speculative exposure to the lithium mining space. This company owns a massive amount of land with impressive lithium deposits. Notably, these deposits are located stateside, which is important, given the ongoing and increasing geopolitical noise we’re hearing in the markets right now.

Importantly, Surge recently engaged M3 Engineering for a Preliminary Economic Assessment (PEA) on its Nevada North Lithium Project. The PEA, expected by Q4 2024, will feature an updated lithium resource estimate.

Metallurgical modeling ensures efficient lithium extraction and high-purity lithium carbonate production. Initial testing achieved over 99% purity, with ongoing trials aiming for 99.9% battery-grade purity. Surge has enlisted Graham Ballachey, an experienced engineer, as the Project Owner’s Engineer for this PEA of the Nevada North Lithium Project.

In 2024, Surge Battery Metals planned to expand resources with an extensive drill program, covering a fraction of the known mineralization area. Additionally, NILIF scheduled surface mapping and soil sampling, pending Bureau of Land Management approval for drilling and awaited metallurgical test results. 

This penny battery stock offers substantial potential in a promising long-term lithium mining sector. For those looking to move up the risk spectrum, this would be my top way to play this space right now.

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On the date of publication, Chris MacDonald 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.