With the fallout in the electric vehicle sector, talking about the best lithium stocks to buy might seem premature. Nevertheless, lithium is more than just EVs.
To be sure, the EV sector represents a major consumer of the critical metal. However, myriad other industries also utilize the commodity. They include consumer electronics, medical devices, aerospace and industrial applications, to name but a few. So, over the long run, lithium should make a recovery.
Factor in the possible recovery of the EV ecosystem down the line along with geopolitical considerations and the sector becomes even more enticing, especially at these levels. With that, below are a few lithium stocks to buy.
Albemarle (ALB)
Headquartered in Charlotte, North Carolina, Albemarle (NYSE:ALB) develops, manufactures and markets engineered specialty chemicals worldwide. It’s one of the top lithium stocks to buy, although it must be said that it’s seen better days. Since the start of the year, ALB lost almost 13% of equity value. In the past 52 weeks, it’s down 27%.
With the fallout in the EV sector, it’s been difficult for investors to trust Albemarle. Notably, analysts are projecting fiscal 2024 earnings per share to land at $3.88. That’s well off last year’s print of $22.25. Even the high-side target calls for only $15.50. Still, fiscal 2025 could see a recovery, the blue-sky target calling for $26.86.
On the top line, fiscal 2024 sales might slip to $5.98 billion. Again, that’s startingly low compared to 2023’s haul of $9.62 billion. However, the most optimistic fiscal 2025 target calls for sales of $11.02 billion.
Bottom line: for patient investors, ALB could be one heck of a deal. Therefore, speculators may consider it one of the lithium stocks to buy.
Sociedad Química y Minera (SQM)
One of the most popular ideas among lithium stocks to buy, Chile’s Sociedad Química y Minera (NYSE:SQM) routinely comes up as a key player in the broader EV landscape. According to its corporate profile, SQM produces and distributes specialty plant nutrients, iodine derivatives, lithium derivatives, potassium chloride and sulfate, industrial chemicals and other products and services.
On paper, the company is an absolute beast. Its three-year revenue growth rate stands at 65.5%, beating out 97.49% of its peers. Its net margin clocks in at 26.73%, above 96.54% of the competition. It also trades at only 12.03X forward earnings, which is conspicuously undervalued. What gives?
Unfortunately, fiscal 2024 projections aren’t great, with EPS possibly landing at $4.26 on revenue of $5.25 billion. Last year, the results stood at earnings of $7.05 on sales of $7.47 billion. However, the most bullish analysts see a recovery in fiscal 2025, with EPS forecasted to hit $7.43 on revenue of $8.61 billion.
While waiting for this narrative to pan out, investors can enjoy the massive forward yield of 10.54%.
Sigma Lithium (SGML)
At this juncture, betting on lithium stocks to buy is risky because of the fallout in the EV sector. However, if you’re not satisfied with mere baseline speculation, then you have Sigma Lithium (NASDAQ:SGML) to consider. Based in Sao Paulo, Brazil, Sigma engages in the exploration and development of lithium deposits in its home market.
To be upfront, the crux of the SGML argument is based on interpretation of price chart data. It’s a volatile idea. Since the start of the year, shares fell more than 47%. In the past 52 weeks, they’re down almost 54%. At the same time, there’s some momentum building recently. In the past 30 days, SGML returned slightly over 16%.
Is that enough to justify an investment? It’s very tough to say considering that Sigma only recently posted revenue ($96 million in the third quarter last year). If you’re going to bet on it, it would be a sentiment play.
That said, analysts rate shares a unanimous strong buy with a $30.94 price target, implying almost 94% upside potential.
On the date of publication, Josh Enomoto 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.
