5 Top Lithium Stocks Betting on a Battery-Powered Future

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The shift to electric vehicles is already in motion — and these companies are tapping into the skyrocketing lithium demand that it’s creating. 

Demand for electric vehicles (EVs) is expected to soar in the coming years. Research firm eMarketer estimates that, by 2040, at least two-thirds of all passenger vehicle sales will come from EVs. 

And the shift is already underway in most markets. Nearly every automaker has announced new lineups of EVs that will debut in the next few years.

All of this is creating a massive demand for high-capacity lithium batteries that will power millions of vehicles. To help automakers reach their EV sales projections, a lot more lithium will need to come out of the ground in the coming years. 

And that’s where the companies on this list come in. Each one is betting at least part of their future on lithium demand. Some of these stocks have already experienced tremendous growth because of it.

We put together this list of top lithium stocks to help you better understand this fast-growing market and, hopefully, benefit from the explosive demand for lithium.

5 Top Lithium Stocks

Here are the top 5 lithium stocks to buy if you’re betting on a battery-powered future.

  1. Albemarle Corp.
  2. Lithium Americas
  3. Livent Corp.
  4. Ganfeng Lithium
  5. Sociedad Quimica y Minera de Chile 

1. Albemarle Corp. (NYSE: ALB)

  • Albemarle (NYSE:ALB)
  • Price: $211.92 (as of close Jan 24, 2022)
  • Market Cap: $24.79B

For investors just getting into lithium stocks, Albemarle may be a good bet. The company isn’t a pure-play in the lithium market, but three things make it worth investors’ consideration: 

  • Albemarle is the world’s largest lithium producer
  • The company is in good financial shape
  • Albemarle is tapping into the growing demand for lithium in China 

The company is diversified into other minerals, including bromines and catalysts. But in the most recent quarter, lithium accounted for 43% of Albemarle’s total sales and half of its net income.

Albemarle benefits from the scale of its lithium production, which has been getting even bigger since the company purchased China-based lithium company Guangxi Tianyuan New Energy Materials toward the end of 2021. 

In its third-quarter press release, management highlighted the company’s focus on China, saying, “We are making investments to add significant conversion capacity in China, initially targeting up to 150,000 metric tons of lithium hydroxide per year.” 

This production increase is important, because China is currently the world’s largest battery-electric vehicle (BEV) market, with nearly 50% market share. And research firm McKinsey estimates that BEV sales in China will grow nearly eight times between 2020 and 2030. 

Mining lithium can be expensive, which is why it’s important to take notice of Albemarle’s relatively low debt obligations, which currently total about $2 billion. 

2. Lithium Americas (NYSE: LAC)

  • Lithium Americas Corp. (NYSE:LAC)
  • Price: $25.59 (as of close Jan 24, 2022)
  • Market Cap: $3.07B

Investors should know right off the bat that Lithium Americas is more of a speculative stock than a stable investment. To give some perspective, here’s what the company said in its most recent quarterly report: 

“The company continues to develop its projects and does not generate revenues from operations.” 

Did you catch it? Lithium Americas isn’t generating any revenue right now. The reason it made this list is because the company has its hands in multiple lithium projects that could end up benefiting it in the coming years. Investors should be aware of these projects’ potential. 

Here are a few project highlights: 

  • Construction of its Cauchari-Olaroz mine in Argentina is underway. The company targets mid-2022 to begin tapping into the initial 40,000 tons of lithium carbonate equivalent (LCE). 
  • Early-phase construction is expected to begin in the first half of 2022 for the company’s Thacker Pass site in Nevada. Lithium Americas owns 100% of the mine, which it says is the “largest known lithium resource” in the United States. 
  • Lithium Americas just purchased Canada-based Millennial Lithium, giving the company the Pastos Grandes mine, another lithium project in Argentina. The company said that construction will begin in 2024 and that it could produce 24,000 tons of battery-quality lithium carbonate annually for the next four decades. 

It’s worth reiterating that Lithium Americas isn’t a stock for everyone. But if you’re investing in the lithium market, at least keep an eye on this company’s upcoming production projects.

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3. Livent Corp. (NYSE: LTHM)

  • Livent Corp. (NYSE:LTHM)
  • Price: $22.56 (as of close Jan 24, 2022)
  • Market Cap: $3.645B

If you’re interested in a lithium pure play, Livent may be your stock. The company was spun off from its parent company, FMC Corp., just a few years ago. In the coming years, Livent will rapidly expand its lithium production.

Several of the company’s lithium site locations, including its Bessemer City project and sites in Argentina, are expected to increase production capacity in the upcoming years. The result could be a doubling of Livent’s lithium production by the end of 2024 — and more than triple its current capacity beyond that year.   

For now, Livent is working through supply-chain issues. In the third quarter of 2021, Livent’s management said, “Most of the improvement in realized prices compared to the second quarter was offset by higher costs and impact of supply-chain issues.” 

However, those supply-chain problems won’t last forever. And the company’s sales continue to trend higher, despite the issues. Livent’s management estimates that full-year 2021 sales will be 39% higher than in 2020, at the midpoint of guidance. 

As with other lithium stocks, Livent’s share price can be a bit volatile. But if you’re looking for a company that’s all-in on lithium, Livent should be on your radar. 

4. Ganfeng Lithium (OTC: GNEN.F) 

  • Ganfeng Lithium Co., Ltd. (OTC:GNEN.F)
  • Price: $15.1925 (as of close Jan 24, 2022)
  • Market Cap: $29.114B

With a market cap of $175 billion, this China-based lithium juggernaut has benefited from China’s expanding EV market and is already the country’s top lithium producer. Ganfeng is a leading supplier of lithium to EV producers in that country, as well as to Tesla. 

While Ganfeng has already worked with Tesla in the past, the company signed an extended deal with the EV automaker toward the end of 2021 that will allow it to supply lithium for Tesla through 2025. 

Not only is the company in a leading position in China’s lithium market, but Ganfeng is also putting up some impressive financial results. The company’s net profits skyrocketed 648% in the first nine months of 2021.

Investors have already taken notice of Ganfeng’s success and have pushed the company’s share price up 780% over the past three years. It’s difficult to predict how well its share price will perform in the coming years, but there’s no denying Ganfeng will continue to lead the lithium charge in China.

5. Sociedad Quimica y Minera de Chile (NYSE: SQM)

  • Sociedad Quimica y Minera (NYSE:SQM)
  • Price: $53.29 (as of close Jan 24, 2022)
  • Market Cap: $15.222B

Last but certainly not least is Sociedad Quimica y Minera de Chile, often referred to as SQM. The company is based in Chile and is diversified across the lithium, potassium nitrate, iodine, and thermo-solar salts markets. But let’s hone in on the company’s lithium opportunity.

SQM said in its third-quarter 2021 earnings report that the lithium market is “exceeding our previous expectations” and that the company’s expanding lithium projects should help continue to bolster its position in the market. 

SQM will reach about 100,000 metric tons of lithium sales volume in 2021 and then accelerate those sales to 180,000 metric tons by mid-2022. 

In the report, management said, “We are now expecting that the lithium market demand should grow close to 50% this year, driven by strong sales of electric vehicles in all relevant markets, especially China and Europe.” 

Potential investors will also be pleased to know that SQM’s earnings per share in the first nine months of 2021 rose more than 148% from the previous period. 

SQM’s strong position in the lithium market, combined with its expanding operations and rising lithium prices, mean that this stock could be a good long-term bet for investors looking for a diversified lithium company. 

Why Invest in Lithium Stocks?

Demand for battery-powered electric vehicles will skyrocket over the next two decades. That’s going to create a huge need for lithium. Thanks to research from eMarketer, here are just a few reasons why lithium stocks could benefit: 

  • More than two-thirds of all passenger vehicles sold in 2040 will be EVs. 
  • The U.S. government wants 50% of new vehicles to be EVs, hydrogen fuel cell, or plug-in hybrid models by 2030. 
  • A handful of automakers have already said that they’ll go all-electric within the next decade, including Volvo and Mercedes-Benz.
  • Automakers in the top three automotive markets — the U.S., Europe, and China — have all pledged to transition toward EVs.

Lithium Stock ETF 

Picking individual stocks to invest in isn’t for everyone. It can be overwhelming to come up with a list of potential stocks, do research about each company, and then keep up with a stock after you invest in it. 

So if picking an individual lithium stock to invest in seems daunting, you may want to consider buying a lithium stock exchange-traded fund (ETF) instead. ETFs give you exposure to a market without having to select a specific stock. They can be a good way to diversify your investment.

If that sounds appealing, the Global X Lithium & Battery Tech ETF (NYSEMKT: LIT) may be a good option. This ETF includes companies that are involved in anything from lithium mining and refinement to battery production. Its holdings are also diversified across many countries around the globe. 

Over the past five years, the returns of the Global X Lithium & Battery Tech ETF have increased more than 200%, doubling the gains of the S&P 500 over that period. 

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Millennial Money is part of The Motley Fool network. Millennial Money has a disclosure policy.

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