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There is an old Japanese saying that goes, “There are many paths to the top of Mount Fuji.”
The expression ends with the heartfelt message that love is, ultimately, the summit of the mountain; but I like to focus on the path to the top – because the first half of the saying also applies to investing.
You see, there are many paths to the mountain summit of profits, through many different trends, many different sectors, and many different plays.
Today, I want to spotlight the path of lithium stocks.
Now, lithium is unique – and valuable – because it is the lightest metal on earth. Since it is the lightest material that can store energy, it has become indispensable for the batteries that power the new digital economy.
We need it for all the devices, gadgets, and sensors in our homes, businesses, and pockets… for the electric vehicles that are the fastest-growing segment of the transportation sector… and for large-scale battery farms to capture the power we get from solar and wind farms.
The lithium market has been Wall Street calls a “falling knife” that will harm any investor who attempts to catch it.
However, the market could soon become a “coiled spring…”
Not Lackluster for Long
The decision to invest in the lithium industry begins with one compelling data point: Global battery cell demand for lithium will soar nearly seven-fold by 2030, according to McKinsey Battery Insights.
If this eye-popping growth projection comes to fruition, battery demand for lithium would account for a whopping 95% of total global demand, and it would become a $400-billion industry.
But despite this powerful demand trend, an excess supply is swamping demand at the moment, which is causing lithium prices to plummet.
Accordingly, lithium-focused stocks have been performing miserably, as you can see in the chart below.
However, these trying times in the lithium market will not last forever.
A Boom Is Coming
Lithium, like most other commodities, subjects investors to extreme boom-bust cycles. As the current over-supply shifts toward under-supply during the next two years, the bust will end… and a new boom will begin.
And that tipping point may be even closer than dismal lithium price trend suggests.
When lithium makes a valiant comeback (and then some!) in the next few years, you’ll want to make sure that you’re already invested in the boom.
So, keep a close eye on your inbox.
Something big is coming soon, and while I can’t share any details yet, you’re going to want to be first in line to learn about it.
Stay tuned — I’ll tell you more on Tuesday.
Regards,
Eric Fry
