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Consider investing in lithium stocks to support the future of cleaner transportation
The best lithium stocks to buy this year should benefit from China’s ambitious goals in electric vehicle (EV) adoption. That’s because its goals require vast amounts of lithium for battery manufacturing. Despite short-term economic fluctuations, China’s demand for lithium could continue to surge as it aims for 60% of new vehicle sales to be electric by 2035.
The electric vehicle (EV) market is experiencing significant growth, with approximately 18% of new car sales in 2023 being electric. The demand for lithium is outpacing supply, and this trend is expected to continue through 2030, presenting a compelling investment opportunity in lithium stocks.
Despite the broader indices trending upwards, the potential of these lithium stocks should not be overlooked. Investors who recognize the long-term value and strategic importance of lithium in the energy transition stand to benefit substantially. Thus, here are the top three best lithium stocks to buy that could be nearing ideal buying zones in July 2024.
Albemarle (ALB)
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Albemarle (NYSE:ALB) is one of the leading producers of lithium and other specialty chemicals globally. The company maintains a diversified portfolio and stands well-positioned to benefit from the increasing demand for lithium in EV batteries.
Despite these positive growth prospects, Albemarle’s stock is trading at a relatively modest forward price-to-earnings ratio of 27x. This valuation becomes even more attractive when considering the company’s projected earnings per share (EPS) growth of 170.64% for next year, resulting in a PEG ratio of 1.51x. This suggests that the market has not fully priced in Albemarle’s growth potential.
The investment community’s optimism about Albemarle’s prospects is evident in the consensus analyst price target of $154, which represents a substantial 53.86% upside from the current stock price. Albemarle’s financial stability and commitment to shareholder returns underscore its impressive track record of 29 consecutive years of dividend growth, making it one of the best lithium stocks to buy.
Sociedad Química y Minera de Chile (SQM)
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Sociedad Química y Minera de Chile (NYSE:SQM) is a Chilean chemical company known for its large-scale lithium production. It is one of the world’s largest lithium producers and has extensive operations in the Salar de Atacama, one of the richest lithium brine deposits.
Despite recent challenges in the lithium market, analysts remain optimistic about SQM’s prospects, with a consensus buy rating and an average price target of $64.80, implying a 53.37% upside from the current price.
SQM reported record-high quarterly sales volumes in its iodine business and expects continued growth in lithium demand, projecting to reach 200,000 metric tons in sales volumes for 2024. With a dividend yield of 5.01% and a payout ratio of 65.45%, SQM offers attractive income potential for investors.
I think then that SQM is one of those best lithium stocks for investors since it manages to offer high-income potential coupled with significant capital appreciation capacity, something which is relatively hard to come by in the materials sector.
Arcadium Lithium (ALTM)
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Arcadium Lithium (NYSE:ALTM) is an emerging player in the lithium market, focusing on innovative extraction and processing techniques to produce high-quality lithium products. The company has significant lithium reserves and is strategically expanding its operations.
Analysts remain optimistic about ALTM’s prospects, with an average price target of $6.28, implying an 81.50% upside from the current price.
ALTM reported solid first-quarter results, with average realized pricing for lithium hydroxide and carbonate exceeding $20,000 per metric ton. Furthermore, Arcadium Lithium is on track to achieve $60-80 million in synergies and cost savings in 2024. This demonstrates effective integration following its recent merger. The company’s expansion plans aim to increase total capacity to 170,000 LCEs by 2026, over four times 2023 production levels.
The company’s projected revenue growth of 44.02% this year and 37.21% next year bode well too. Thus, Arcadium Lithium appears well-positioned to capitalize on the growing demand for lithium products in the coming years.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed 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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