As EVs grow more prominent in society, an increasing number of automakers are transitioning from manufacturing cars with internal combustion engines (ICE) to manufacturing just electric vehicles (EV). One of the most important components of electric vehicles is the battery, which is constructed from lithium, an element that can only be extracted in specific regions.
As the demand for electric vehicles (EVs) continues to grow, lithium consumption is likely to grow dramatically in the future years and decades.
As lithium prices trend upwards due to the rapid expansion of the electric vehicle (EV) sector over the next decade, investors are focusing on junior lithium mining stocks to obtain leverage on what will be an explosive run upwards.
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What Are Lithium Stocks?
The shares of firms engaged in lithium mining or processing lithium are lithium stocks. In contrast to other precious metals such as gold and palladium, traders cannot invest in lithium as a commodity. Instead, they can obtain exposure by investing in lithium firms that are publicly listed. This is comparable to uranium metal and uranium stocks.
Lithium is mostly mined from spodumene mines and brine sources. Australia has the most spodumene mines as one of the world’s major lithium producers. The majority of brine production occurs in South America. Lithium carbonate and lithium hydroxide are the two primary types of lithium manufactured by enterprises.
Developers are worried about the types of lithium utilized in the creation of their products as they strive to make lighter and speedier products to meet rising consumer expectations. In an environment where renewable technology is expanding fast, and major corporations like Tesla rely on lithium as a crucial component of their products, the demand for lithium has surged significantly. Whereas some traders are concerned about the market’s potential volatility, others see investing in lithium as an excellent opportunity to potentially profit from a market with a quick increase in demand.
Traders may invest in lithium mining stocks, which are shares of firms engaged in lithium mining, and lithium battery stocks, which represent companies that create the batteries. It is also feasible to trade the shares of corporations active in both industries.
What You Must Know Concerning Lithium Stocks
When deciding whether to invest in lithium startups or more established firms, one of the available options is whether to invest in lithium-based stocks.
Startups in the lithium industry are in the process of creating their mines and products. They may not be earning a profit and carry greater risk, but their share price has greater potential for growth if things go well.
Already, more established lithium enterprises produce lithium and market products. They have a lower risk profile and are more likely to disperse gains to shareholders, making them advantageous for dividend investing. The disadvantage is that their growth potential for stock returns is lower.
You must also invest if you choose to invest in firms focused on the initial production of lithium, such as lithium mining stocks, or in companies that deal with lithium-based products, such as lithium battery stocks and lithium recycling stocks. The lithium price has a considerable impact on the performance of miners. Price and demand for lithium products are essential factors for producers, but so is the quality of their goods.
A well-diversified portfolio would include investments in all types of lithium. If you need assistance with this, ask a financial expert for guidance on which lithium stocks to purchase.
What Are The Advantages And Disadvantages of Investing in Lithium Stocks?
Any investment has advantages and disadvantages, and lithium stocks are no exception. When it comes to investing in lithium shares, the following benefits and drawbacks may be encountered.
Advantages
- The future of energy storage and transportation is lithium.
- Trading lithium sticks is straightforward.
- A clever strategy to create enormous value
- Demand and prices are projected to increase in the future, resulting in an outstanding return on investment.
Disadvantages
- Only a few manufacturers of lithium exist.
- Lack of transparency on lithium prices
- Lithium is not accessible for public trade. Thus you cannot invest in it directly.
Is Lithium An Attractive Investment in 2022?
If you actively watch the stock market, you must have observed the periodic shifts that occur. Prices increase and fall naturally, reflecting nothing more than a momentary shift in demand. However, lithium stocks still have the potential to skyrocket this or next year, making it an excellent investment opportunity. You should investigate the top stock investment applications if you are a novice.
How Much Do Lithium Stocks Cost?
Frequently, your ability to invest in anything will be contingent on stock prices. The inaccessibility of stocks to persons with fewer investment resources might be problematic. However, you will be glad to know that lithium stock prices fluctuate, allowing everyone to profit from a potential lithium stock boom.
Before you invest, you should research the performance of lithium stocks. Why is investing now so popular, and why is the demand so high?
Tesla was the first firm to provide sleek and appealing electric vehicles, but it is no longer the only one. Other automakers are beginning to follow suit. Thus it is certain that the need for lithium batteries will expand significantly. Therefore, is lithium stock a wise investment? If you know where to invest it wisely, yes.
When selecting a lithium firm to invest in, it is important to examine your purchasing power. There are other possibilities with current prices as low as $15 if you do not want to make a substantial investment. Consider stocks such as Albemarle (ALB) for roughly $200 if you wish to make a substantial investment with the expectation of a large increase in the value of a more successful firm.
Lithium Stocks List
Lithium prices are rising as the demand for batteries for electric vehicles develops. This list of the top lithium stocks will help investors profit from the industry’s expansion.
Sociedad Química y Minera de Chile (SQM)
Sociedad Qumica y Minera de Chile, a Chilean chemical firm, is one of the world’s largest lithium producers. The corporation was founded in the late 1960s, and its native nation possesses one of the greatest lithium deposits in the world. Due to the rapidly increasing demand from the electric vehicle industry, Sociedad Qumica y Minera de Chile increased the production of lithium carbonate and lithium hydroxide at the Salar de Atacama in the Atacama Desert in northern Chile. The company’s manufacture of potassium nitrate and iodine is also profitable.
Sigma Lithium Corporation (NASDAQ:SGML)
Sigma Lithium Corporation (NASDAQ: SGML) is a Canadian-based mining organization. The firm is engaged in the development of hard rock lithium resources in the Americas and wants to become the most cost-effective provider of lithium batteries to the EV industry. Sigma Lithium Corporation (NASDAQ: SGML) began on-site construction in December to develop the production plant’s foundation, and infrastructure installation at its Grota do Cirilo project.
Due to its rising momentum and optimistic analyst and investor opinion, Sigma Lithium Corporation (NASDAQ: SGML) is an intriguing lithium stock to purchase. The stock has risen an astonishing 270.94 percent over the past year as of April 26. In addition, Canaccord analyst Katie Lachapelle increased her price objective for Sigma Lithium Corporation (NASDAQ: SGML) from $24 to $25 in April and maintained her Speculative Buy rating.
The positions of hedge funds in Sigma Lithium Corporation are growing (NASDAQ: SGML). Insider Monkey discovered that at the end of Q4 2021, Sigma Lithium Corporation (NASDAQ: SGML) was included in 3 hedge funds’ portfolios with a total holding of $11.77 million. Waratah Capital Advisors was the most notable stakeholder in the group. This compares to two positions with $8.47 million in stakes in the third quarter of 2021. The opinion of hedge funds about the stock is optimistic.
Albemarle
Albemarle is a specialty chemicals corporation with headquarters in Charlotte, North Carolina (ALB, $242.41). The three divisions of ALB are lithium, bromite specialties, and refining catalysts.
Early in May, the firm released its first-quarter results, which included a 36 percent year-over-year increase in net revenues to $1.1 billion.
Adjusted EBITDA increased by 88 percent year-over-year to $432 million, while adjusted profits per share increased by 116 percent year-over-year to $2.38.
Albemarle has updated its fiscal 2022 projection due to the escalating prices of lithium and bromine. It now anticipates a 60 to 70 percent increase in net sales year-over-year, in the range of $5.2 billion to $5.6 billion. Adjusted EBITDA is now anticipated to range between $1.7 billion and $2 billion, a considerable increase from the $871 million recorded in fiscal 2021.
Albemarle CEO Kent Masters stated in the company’s Q1 press release, “Many of the end markets we service are vital to the shift to cleaner energy and the advancement of electrification and digitalization.” Our continued investments capitalize on these markets’ strong price trends and quick development.
These positive results are one of the reasons why David Begleiter, an analyst at Deutsche Bank, believes ALB is a great buy among lithium stocks.
The analyst notes that ALB has “two new world-scale lithium projects [in Australia] commencing in 2022” and “the world’s largest and most varied lithium resource base, which gives more “shots on goal” than any other lithium business.
Begleiter feels that Albemarle is well-positioned to profit from the 33 percent compound growth in lithium demand over the next several years and has set a price objective of $290 for the stock.
Eight of the fourteen analysts tracking ALB have been optimistic about the stock in the last three months.
Lithium Americas Corporation (LAC)
Lithium Americas Corporation, founded in 2007 in Vancouver, Canada, is a very young corporation. They are engaged in two significant lithium mining projects, one in Nevada’s Thacker Pass and the other in Argentina. Thacker Pass is the biggest known lithium deposit in the United States, whereas LAC’s Argentina project would be the largest new lithium brine operation in the past two decades.
Both of these projects are currently in the planning stages. LAC does not produce lithium or generate income at this time, and this makes the company riskier than more established competitors. However, if they are able to successfully launch their projects, there should be a huge demand for their output, making them one of the lithium stocks that might experience a significant price increase.
Another high selection on this list, Ganfeng Lithium, is LAC’s major shareholder, and Ganfeng holds an 11% stake in Lithium Americas Corporation.
Sigma Lithium (NASDAQ:SGML)
Sigma Lithium’s Grota does Cirilo hard-rock lithium project in Minas Gerais, Brazil, has been producing on a pilot scale since 2018. Sigma anticipates an annual Phase I output of 220,000 metric tons (MT). The company’s stated mission is to become “one of the world’s major producers of high-purity, ecologically sustainable lithium products at the lowest cost.” Sigma is in the process of establishing its Greentech dense media separation manufacturing facility, which will result in its activities being vertically integrated.
Bank of America (NYSE: BAC) recently identified the firm as one of its “Top 50 Stocks for 10 Scarcity Themes.” The corporation highlighted its environmental, social, and governance initiatives at the end of March, including the donation of 7,000 food baskets to the region in which it works. Mid-April, the business revised its feasibility assessment for Grota do Cirilo to include a potential increase in annual production capacity to 450 000 MT. Its share price was high for most of April and early May before declining.
Sigma submitted a unified technical report on Grota does Cirilo’s early production stages on May 26. The integrated plant would obtain spodumene ore as feedstock from the company’s Phase 1 and Phase 2 lithium resources in order to generate battery-grade, high-purity lithium concentrate. This growth scenario, according to the firm, “could place (it) as the world’s fourth-largest lithium producer.” The company estimates the after-tax net production revenue at US$5.1 billion and the after-tax internal rate of return at 589 percent. The revelation caused Sigma’s share price to reach an all-time high of $18.30 on May 27.
Sigma said lately that it had enhanced the resources at Grota do Cirilo by fifty percent.
Neo Lithium Stock (TSXV)
Neo Lithium’s 3Q project in Argentina is regarded as one of the world’s top lithium assets due to a variety of features, including one of the lowest impurity counts (Sulfate and Magnesium) in the world.
The amount of recognized reserves is 4 million metric tonnes, while the amount of inferred reserves are significantly greater.
It is the third-highest graded project in the world, which is its primary selling point. However, given that the firm is currently expanding its resources (including brine ponds), a decline in lithium demand might pose a financial risk.
Panasonic (PCRFY)
Panasonic, surprisingly, provides batteries to Tesla. Nonetheless, this is simply one aspect of Japanese business. Automotive & Industrial Systems, Eco Solutions, Connected Solutions, Appliances, and Other are Panasonic’s operational segments.
Earnings have, in general, been erratic. Panasonic is a multifaceted company that extends well beyond the lithium battery sector, having divisions in electronic component mounting, home appliances, and construction products.
Lithium Americas
Lithium Americas is a corporation that specializes in lithium development projects. In particular, the company is pursuing the Cauchari-Olaroz lithium brine project in Jujuy, Argentina, and the Thacker Pass lithium project in Nevada. These two businesses are anticipated to be operational by 2023, and the firm is well-positioned for expansion as the EV industry continues to flourish. Currently, a share of LAC stock costs $23.20 as of 11:30 a.m. ET.
Global lithium consumption would be a primary growth driver for Lithium Americas. By owning mines in both Argentina and Nevada, the firm will be able to fuel a wide range of electric vehicle (EV) activities. For example, its Nevada facility will have potential synergies with the Texas location of Tesla’s (NASDAQ: TSLA) Gigafactory as well as SpaceX companies. Due to the need for lithium, it is possible that Lithium Americas may enter into long-term deals with both of these corporations.
This provides a measure of protection (when one business performs poorly, other divisions may frequently make up the difference), but it can also dilute the development potential of a “pure play” lithium battery manufacturer.
Nonetheless, Panasonic is well-positioned in the industry.
Piedmont Lithium Limited (PLL)
Piedmont Lithium Limited is one of the United States’ most potential lithium producers. It produces hard rock lithium properties in Quebec, Canada, Cape Coast, Ghana, and Gaston County, North Carolina.
Piedmont Lithium serves a diverse array of markets. They manufacture metal for lithium-ion batteries and vital minerals for daily life.
The firm secured a supply contract with Tesla in 2022. Due to the investment’s status as one of the most speculative, shareholders may expect high returns on long-term stocks.
You may view the performance of PLL’s lithium stocks on Google Finance. Piedmont Lithium focuses on the production of sustainable technology, which is the technology of the future.
Final thoughts
Due to escalating demand for rechargeable batteries and supply problems, lithium prices have increased. In addition, the rising production and demand for electric vehicles are driving the expansion of the lithium market. The aforementioned list has been exhibiting outstanding development prospects and has benefited greatly from the surge in EVs and rechargeable battery demand. Consequently, these are the top Lithium stocks to purchase in 2022 to profit from a developing market.
what are the best lithium stocks in Brazil?
Next time I will write annother article about it.