Are Lithium Stocks Worth Buying And Which Ones Are The Best?

lithium stocks

Lithium stocks  are getting a lot of buzz among investors. You’ll find the element in (lithium ion) batteries, like the ones used to power the iPhone, iPad, and Mac laptops.

In addition, lithium is used to make batteries for electric cars. Nearly every major automaker has rolled out plans to further grow its electric car business. For example, Volkswagen has a $12B plan to produce electric cars in China.

Lithium comes from two different types of deposits.  Deposits come from China, Canada, and the United States.

The global lithium-ion battery market is expected to reach $77.42B by 2024, at a CAGR of 11.6% throughout the forecast period (2016- 2024), according to Transparency Market Research.

 

lithium stocks

Top Lithium Mining Stocks

FMC Corporation (NYSE: FMC) – A chemical company involved in agricultural, consumer, and industrial markets worldwide. It operates in three segments: FMC Agricultural Solutions, FMC Health and Nutrition, and FMC Lithium.

FMC Lithium offers lithium for use in batteries, polymers, pharmaceuticals, greases, lubricants, glass and ceramics, and industrial uses. In February of 2018, the firm announced that it would be offering a stake in its lithium business through an IPO.

It has a multi-billion dollar market cap and is a member of the S&P 500. The company pays investors an annual dividend of $0.66 per share.

Albermarie Corporation (NYSE: ALB) – It develops, manufactures, and markets engineered specialty chemicals worldwide. The firm offers lithium compounds, including lithium carbonate, lithium hydroxide, lithium chloride, and lithium specialties and reagents for applications in lithium batteries.

It has a multi-billion dollar market cap and is a member of the S&P 500. It pays investors an annual dividend of $1.28 per share.

Sociedad Química y Minera de Chile S.A. (NYSE: SQM) – The company  produces and distributes specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services.

SQM is the world’s largest producer of lithium. It  produces and sells  lithium carbonate and lithium hydroxide.

The corporation has a multi-billion dollar market capitalization and pays investors an annual dividend of $0.86.

lithium stocks

 

How To Own The Best Lithium Stocks

The quickest and easiest way to gain access to the world’s best lithium stocks is by going the ETF route. The Global X Lithium & Battery Tech ETF (NYSE:LIT) invests in the full lithium cycle. It attempts to track the performance minus fees and expenses of the Selective Global Lithium index.

Some of its top holdings include: FMC Corp; Albemarle Corp; Quimica y Minera Chile; LG Chemcial Ltd; Panasonic Corp and Tesla. One of the benefits of the ETF is that it gives investors a chance to buy into  international companies that are not traded on the major U.S. stock exchanges. The ETF trades on the New York Stock Exchange.

Speculative Lithium Mining Stocks

Some of most speculative lithium stocks are in the junior mining space.  Lithium junior minors are exploratory companies. They produce little to no lithium. Instead, they may own property rights or something similar.

Lithium junior miners primarily rely on financing during its exploration process. A common practice is to issue new shares to the market, called a secondary offering, as a way to raise cash. Dilution can negatively impact a stock price; especially if the company reaches high levels of debt.

Many of these companies trade on the OTC markets and are popular among day traders. When doing your research, make sure to study the management  of these companies, and see if they have a track record of success.

What The Best Lithium Stocks Have In Common

  • a positive return on assets
  • positive return on equity
  • gross margins are in mid 30s
  • offer a dividend

 Bottom Line

The demand for electric vehicles will continue to rise. Lithium stocks could appreciate over the coming years. Apple and Samsung use lithium-ion batteries for its phones and mobile devices.

The quickest and easiest way to gain exposure is by going the ETF route. However, if you are searching for speculative opportunities, lithium junior mining stocks can offer a great deal of profit potential,

There is real excitement behind the lithium space. Don’t be surprised to hear about some companies jumping on the bandwagon. Like in 2017, when firms were changing their name to ride the bitcoin wave.

As always, do your own due diligence and don’t fall for the hype.

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