Almost every tech innovation is anchored on this versatile metal, which is why lithium stocks are such an enticing investment opportunity.
There is an exhaustive list of applications fueling lithium demand, including:
- Lithium-ion batteries
- Electric vehicle market, battery plants, and renewable power
- Electrical transmission
- Smartphone industry
Although many only view electric cars as the driving force behind the impending lithium boom, there are countless applications.
Our guide on lithium provides a deep dive into what lithium stocks are poised for massive growth in the near future.
Why Buy Lithium Stocks?
While the electric vehicle trend is the key catalyst for lithium demand, lithium stock is not only limited to the automobile industry.
This is evidenced by United Airline’s recent announcement of the purchase of 100 fully electric 19-seat, short-distance planes.
As multiple industry sources have confirmed, demand for both lithium carbonate and lithium hydroxide is expected to rise.
Continue reading to learn more about the top lithium stocks and which lithium producer(s) to watch out for.
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Lithium Battery Stocks
1. Albemarle Corp. (ALB)
Albemarle Corporation is one of the largest lithium producers in the world.
The chemicals company has a significant lithium business that develops a broad range of lithium compounds.
These compounds are used in manufacturing many consumer-electric products and have applications in the electric vehicles industry.
The company generally enters into long-term contracts with its customers, which has also helped protect its revenue streams from tumbling lithium prices
In the most recent Q1 earnings call, Albemarle came up with close to 40% earnings, which surprise analyst estimates.
The company also announced that its two projects that will boost its lithium processing capacity are in their final stages, setting it on the right track for future expansion.
Albemarle also offers investors a 0.8% dividend yield — which coupled with 25% YTD gain, makes for a good investment in 2021, as it’s far outpacing the market gains.
2. Livent Corp. (LTHM)
This U.S.-based chemical manufacturing company is a well-known manufacturer and distributor of lithium chemicals.
Its lithium products are used for applications in EV batteries, portable electronic devices, aerospace alloys, and other industrial uses.
Livent is a key supplier for Tesla and has a lithium hydroxide supply contract in place through the end of 2021.
Recently, the company also agreed on a lithium supply deal with BMW.
Livent comfortably beat profit expectations and had a 48% increase in earnings per share in its Q1 earnings call due to rising lithium sales.
Also, Livent plans to triple its carbonate capacity in Argentina and expand hydroxide capacity in multiple geographies to meet growing customer demand.
Livent had close to a 500% run from its COVID-19 April lows last year, so this year’s lackluster performance of less than 1% gain is not a reason to worry.
Investors should also keep a close eye on a possible longer-term partnership between Tesla and Livent, which could be a big catalyst for the stock price going forward.
Lithium Mining Stocks
3. Lithium Americas Corp. (LAC)
Lithium Americas is a Canadian-based mining company with a focus on Argentina and Nevada early-stage projects.
The company further advanced its Argentinian capacities with a recent investment in Arena Minerals for around $5 million.
At the same time, Lithium Americas began finalizing plans to invest around $400 million on the first phase of its Thacker Pass project (Nevada), which is to be open by 2023.
Another boost to the Nevada project came this week, as a U.S. federal judge rejected environmentalists’ request to halt further Lithium Americas digging due to the concern about the local plants and wildlife.
In a recent report, Deutsche Bank analysts put a $22 price target for LAC stock, which would imply close to 70% upside potential from where the stock is currently trading at.
4. Sociedad Quimica y Minera de Chile (SQM)
Sociedad Quimica y Minera de Chila is a Chilean chemical company that supplies a wide range of industrial chemicals.
It is also the world’s largest producer of lithium (thanks to its facilities which are located in the Atacama Desert).
Along with its lithium dominance, SQM is also a market leader in potassium nitrate and the world’s largest producer of iodine.
This means it’s a diversified company that should be able to handle price fluctuations in lithium over time.
As a result of the rising lithium demand, Sociedad Quimica y Minera reported a 180% jump in lithium sales volumes in the first quarter of 2021.
The company also plans to increase the capacity of its Atacama Desert lithium operations by the end of 2022.
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SQM has a very strong balance sheet that can be seen by the $1 billion in cash and only $2 billion in debt — which compared to a $12 billion market capitalization is very low, while the pre-tax margin is consistently high in the 20–30% region.
This did not stay unnoticed among the big institutional players, as Oaktree, Driehaus Capital, and SailingStone Capital are all currently invested in this name.
5. Ganfeng Lithium Co Ltd (002460.SZ)
Ganfeng (OTC Pink: GNENF) is a China-based company involved in the research, development, production, and sales of various lithium products mainly used in electrical vehicles, chemicals, and pharmaceuticals.
While China is the company’s main market, it exports its products to overseas markets as well.
Global expansion and reach play a major role in Ganfeng’s strategy.
This year alone, several major projects have been completed, including the acquisition of a stake in a lithium mine in Mali for $130 million and approval for the construction of a lithium plant in northern Argentina.
Ganfeng is also in advanced talks to buy Millennial Lithium for $280 million.
As all these events led to a huge price move since July, investors may want to wait for some price consolidation before jumping in.
Best Lithium Penny Stocks
6. Rock Tech Lithium Inc (RCK.V)
Rock Tech Lithium is a Canadian-based mining company with major expansion plans targeting Germany as a location for its lithium refinery plant.
This $400 million planned project already drew attention from some of Europe’s most notable investing billionaires, like Peter Thiel and Alan Howard, as Europe rolled out ambitious plans to overtake China as the top EV market this year.
This means that major investments in the necessary infrastructure is needed to reduce dependence on Asian battery makers.
With a planned opening date sometime during 2023, its proximity to Tesla’s Berlin factory, and its nearby Volkswagen AG electric-car plant, the project seems to have all the necessary ingredients to become a major hit for Rock Tech and its investors.
The stock vaulted close to 600% since mid-November last year and didn’t give back much of those gains which signals that investors have faith in the long-term prospects.
7. First Energy Metals Ltd. (FE)
First Energy is a Canada-based company that is engaged in the exploration and development of energy metals and commodities (such as lithium, cobalt, and graphite) within its property portfolio in North America.
The Company’s goal is to acquire and advance projects through prospecting and early-stage exploration as well as to find prospective joint venture partners to fund future exploration and project development.
Their two most important projects are Lithium Property, which consists of claim blocks totaling over 2,400 hectares of land in Nye County, Nevada, and the Augustus project in northeastern Quebec.
First energy stock gained close to 43% this year, which makes it one of the largest gainers from the list.
8. Lake Resources (LLKKF)
Lake Resources is an Australian clean lithium developer which uses cleaner, direct extraction technology for the development of high purity lithium.
The most important projects for Lake Resources include the flagship Kachi Project as well as three other lithium projects also located in Argentina.
This endeavor is becoming increasingly important on the world’s lithium mining map.
Lake’s main customers and target groups include electric vehicle makers and battery makers.
These target groups are projected for major growth in the coming years, as demand for clean transportation and power sources is vastly unmet.
One of the advantages of the company’s extraction and production process is that they aim to be as environmentally friendly as possible.
This makes the company an interesting prospect for the ever-increasing number of ESG oriented fund managers around the world.
American Lithium Stocks
9. Piedmont Lithium (PLL)
Piedmont Lithium is a U.S.-based company that is engaged in drilling campaigns, exploration, and production of lithium in North Carolina.
Their goal is to become a strategic domestic supplier of top lithium hydroxide and other chemicals to the growing electric vehicle and lithium batteries storage markets.
The company reported last year that a binding agreement was signed with Tesla for the supply of Spodumene concentrate from its North Carolina deposits.
The desire to become a leading U.S. supplier of battery-grade lithium was further emphasized during their initial public offering (IPO), where a total of $57.5 million was raised which will be used for further expansion projects.
All of these paid off handsomely for investors, as Piedmont stock appreciated 83% in 2021, far outpacing SP500 20% and Dow Jones 16% gains.
10. Energizer Holdings Inc. (ENR)
Energizer Holdings specializes mostly in producing various lithium, alkaline, nickel, and other types of batteries and lighting which are sold under the Energizer and Eveready brands.
It is not a pure lithium play like other companies from this list since it creates lithium batteries.
The company has the potential to do well with the broader lithium and EV sectors while not being too exposed to the ebbs and flows of the lithium market.
The company could be an interesting prospect for a takeover or investment from some of the car manufacturers as they look to invest more in their downstream value chains.
This is especially true if its management decides to capitalize more on the EV and EV batteries segment.
Should I Buy Lithium Stocks?
While investment decisions depend on an individual’s preference, risk tolerance, and investing time horizon, the sheer magnitude of the green energy movement is enough to warrant serious interest.
Multiple industries from transportation, energy production and storage, the smartphone industry, and others make a strong case for investors to allocate a part of their portfolio to lithium stocks.
Just consider the fact that the current penetration of electric vehicles in total car sales globally is still low.
So it is bound to increase substantially, as most main car manufacturers plan to abandon internal combustion engine cars altogether by 2030.
This stance is confirmed by world governments as the European Commission recently proposed a ban for all ICE cars from the year 2035.
At this moment, around 400,000 tons of lithium are mined in a year, which covers around 2 million to 3 million electric vehicles, though only a third of that number goes to EVs right now.
That number will have to increase perhaps as much as tenfold to meet Tesla’s needs alone, without even taking into account other vehicle makers and their lithium battery requirements.
While most trends inevitably go through up and down cycles, this one is bound to last for several decades based on expert data.
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Lithium Stocks: Final Thoughts
As most of the lithium-related stocks suffered from the revenue growth side and trade heavily based on future growth prospects driven by the green revolution, investors should expect these names to be more volatile.
However, despite the potentially larger price swings in the short run, the tailwind of the massive and fundamental shifts in renewable energy is likely to gain even more momentum.
The increasing demand for lithium will continue throughout the next decade.
As more realize the financial incentives for this commodity, we will likely see more investors jump into the market.
This makes lithium stocks one of the groups with the most potential for significant price appreciation in the following years.
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