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Crisis has become an opportunity for beaten-down lithium stocks.
For one, according to Exxon Mobil (NYSE:XOM), “the world urgently needs more lithium than it’s producing today.”
Two, we’re just starting to see electric vehicle sales bounce back. In fact, according to Kelley Blue Book, about 330,460 EVs were sold in the U.S. just in the second quarter. With those numbers likely to increase even more, far more lithium will be needed.
In addition, according to FastMarkets.com, we could see 487% growth in lithium demand to nearly 412,000 metric tons by 2030. Plus, according to the United Nation’s Conference on Trade and Development, demand for metals, such as lithium are “on track” to outpace production through 2050. The UN group also noted that “Lithium tops the list, with expected demand in 2045 more than tripling the likely supply in that year of nearly 1,400 metric tons.”
In short, it’s time to buy the excessive fear in lithium stocks before others wake up. In fact, here are seven of the top lithium stocks you may want to buy on weakness today.
Albemarle (ALB)
Source: IgorGolovniov/Shutterstock.com
At $93.81, the pullback in Albemarle (NYSE:ALB) is overdone.
Not expecting for it to stay this low for long, I’d buy it here. While we wait for the eventual recovery, we can collect its 1.73% yield. Its new dividend of $0.405 is payable Oct. 1 to shareholders of record as of Sept. 13.
Granted, most firms are negative on ALB with the pullback in lithium prices, but the drop truly has become overkill. And to be honest, their fear is our opportunity to buy. Also, if the Federal Reserve does cut interest rates this year, as expected, it could drive electric vehicle sales, and related EV-related investments even higher, including lithium.
Helping, recent earnings growth wasn’t too shabby. In its first quarter, the company posted adjusted earnings per share of 26 cents, which beat by a penny. Also, its total revenue did rise to $1.36 billion, which was better than the $1.29 billion forecast.
Sociedad Quimica Y Minera (SQM)
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Sociedad Quimica Y Minera (NYSE:SQM) is another one of the top lithium stocks to buy on weakness.
While we also wait for SQM to recover, we can also collect its yield of about 5.09%.
Earnings haven’t been hot, but that’s to be expected with current lithium prices. In its first quarter, its EPS loss of $3.04 missed by $1.46. Revenue, down 52.2% year over year, also missed by $60 million. However, it looks like the stock is priced in that weakness, as well as weakness from lithium prices. Plus, the company did raise its FY 2025 numbers.
According to SQM Chief Executive Officer Ricardo Ramos: “We believe that the strong demand growth in the lithium market seen since the beginning of the year could continue for the remainder of the year, with total lithium demand surpassing 1.1 million metric tons during 2024. Given this positive trend in demand growth, especially in China which accounts for almost 75% of global lithium demand, and our updated sales volumes outlook for the year, we believe that our sales volumes could reach 200,000 metric tons in 2024.”
Arcadium Lithium (ALTM)
Source: Bjoern Wylezich/ShutterStock.com
Arcadium Lithium (NYSE:ALTM) is also a buy on weakness.
For one, as a low-cost lithium producer, the company should see a massive acceleration in earnings growth with heavier demand for lithium. Two, analysts at RBC Capital just initiated a buy rating on the stock with a price target of $4.
In fact, as noted by the firm, ALTM offers investors “the most vertically integrated, and diversified lithium and chemical exposure across our coverage.”
Also, as noted by Investorplace contributor Muslim Farooque, “It’s on course to realize roughly $60 to $80 million in synergies and cost reductions this year. Moreover, analysts forecast a healthy revenue increase of 34% to $1.19 billion this year and an even more staggering growth to $1.61 billion by 2025. Hence, ALTM is poised for significant growth.”
While ALTM won’t make you rich overnight, patience will be rewarded.
Standard Lithium (SLI)
Source: Postmodern Studio / Shutterstock.com
Standard Lithium (NYSEAMERICAN:SLI) has been a standout winner.
Rallying from about $1.20 to $1.45 on heavy volume, it’s been one of the bright spots of a bleak lithium market. Things could get even better for the company, especially, with electric vehicle sales on the mend and the potential for interest rate cuts from the Federal Reserve in September.
Helping, there’s a consensus strong buy on the SLI stock with a target of $3.97.
Better, Standard Lithium recently announced its partnership with Equinor to develop its large-scale lithium projects in the Smackover Formation of east Texas and southwest Arkansas. With this, the deeper pockets at Equinor could help de-risk current SLI projects and help reduce its capital expenditure obligations moving forward.
“With this partnership, we have the opportunity to accelerate our progress and carve out a significant role in shaping the future of sustainably produced lithium,” added Standard Lithium CEO Robert Mintak, as noted in a company press release.
Global X Lithium ETF (LIT)
Source: GrAl / Shutterstock.com
We can also look at exchange-traded funds (ETF) like the Global X Lithium ETF(NYSEARCA:LIT).
With an expense ratio of 0.75%, the ETF invests in the complete lithium cycle. That includes mining and refining the metal through battery production.
Some of its 40 holdings include Albemarle, Pilbara Minerals (OTCMKTS:PILBF), Tesla (NASDAQ:TSLA), BYD Co. (OTCMKTS:BYDDF), Arcadium Lithium(NYSE:ALTM), and Panasonic (OTCMKTS:PCRHY).
We also have to consider that should we see a stronger green energy boom and a global recovery in electric vehicle sales, lithium prices should explode even higher. Plus, as noted by the United Nations Conference on Trade and Development, lithium demand is “on track” to outpace production through 2050.
All of which could send lithium prices through the roof.
Amplify Lithium & Battery Technology ETF (BATT)
Or, we can jump into an ETF like the Amplify Lithium & Battery Technology ETF (NYSEARCA:BATT) once it bottoms out again.
After failing at $9.60 resistance, it’s just starting to pivot lower again. Instead of trying to catch a falling knife here, it’s best to wait until a new bottom is in place.
Longer term, this is another hot ETF that could double, even triple, when lithium prices and related stocks start to push well off their lows. While simplistic to say, it’s only a matter of time before lithium recovers and takes the BATT ETF along for the ride.
With an expense ratio of 0.59%, the BATT ETF provides exposure to global companies that develop, produce and use lithium battery technology — all for less than $10 a share. BATT ETF has 91 holdings, including Tesla, Albemarle and Sociedad Quimica Y Minera.
Piedmont Lithium (PLL)
Source: T. Schneider / Shutterstock.com
I’d also wait to buy Piedmont Lithium (NASDAQ:PLL) on a pullback.
After rallying from about $9, it’s failing at $12.65 resistance. Instead of trying to catch the falling knife here, I’d wait for it to bottom out first.
Longer-term, there’s a lot to like here, especially after the company received approval for a permit for the construction and operation of its proposed Caroline Lithium project from North Carolina. Better, the company says its mine could be one of North America’s biggest sources of lithium for electric vehicle batteries.
Roth MKM also reiterated a buy rating on Piedmont with a $65 price target shortly after it received approval for its mining permit from North Carolina.
Again, while I do expect to see further weakness immediate term, the stock has substantial upside opportunity with its projects over the long haul.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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