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The shift to electric cars is already underway — and these companies are tapping into the growing demand for the lithium it creates.
The demand for electric vehicles is expected to rise in the coming years. Research firm eMarketer estimates that, by at least 2040 thirds All passenger car sales will come from electric vehicles.
A transformation is already underway in most markets. Almost every automaker has announced new lineups of electric cars that will debut in the next few years.
All of this creates a huge demand for high-capacity lithium batteries that will work Millions of vehicles. To help automakers reach electric vehicle sales forecasts, more lithium will need to get off the ground in the coming years.
Here comes the role of the companies included in this list. Every company is betting at least part of its future on lithium demand. Some of these stocks have already seen massive growth because of this.
We’ve compiled this list of top lithium stocks to help you better understand this fast-growing market, and hopefully take advantage of the massive demand for lithium.
5 highest lithium stocks
Here are the top 5 lithium stocks you can buy if you’re betting on a battery-powered future.
- Albemarle Corp.
- Americas Lithium
- Livent Corp.
- Ganfeng lithium
- Chemistry and Mining Society of Chile
1. Albemarle Corp. (NYSE: ALB)
- Albemarle (NYSE: ALB)
- the price: $216.02 (As of closing February 4, 2022)
- Market Capital: $25.269B
For investors getting into lithium stocks, Albemarle might be a good bet. The company is not just a game in the lithium market, but there are three things that make it worth the attention of investors:
- Albemarle is the largest lithium producer in the world
- The company is in good financial condition
- Albemarle takes advantage of the growing demand for lithium in China
The company diversifies into other minerals, including bromine and catalysts. But last quarter, lithium accounted for 43% of total sales for Albemarle and Half of its net income.
Albemarle is benefiting from its lithium production scale, which has become larger since the company acquired China-based Guangxi Tianyuan New Energy Materials at the end of 2021.
In its third-quarter press release, management highlighted the company’s focus on China, saying, “We are making investments to add significant conversion capacity in China, and are initially targeting up to 150,000 metric tons of lithium hydroxide annually.”
This increase in production is significant, because China is currently the largest battery electric vehicle (BEV) market in the world, with a market share of about 50%. Research firm McKinsey estimates that sales of electric vehicles in China will grow nearly eightfold between 2020 and 2030.
Lithium mining can be expensive, which is why it’s important to be aware of Albemarle’s relatively low debt obligations, which currently total about $2 billion.
2. Lithium of the Americas (NYSE: LAC)
- Lithium Americas Corp. (NYSE: LAC)
- the price: $26.33 (as of closing February 4, 2022)
- Market Capital: $3.512B
Investors should know right away that Americas lithium is more of a speculative stock than a stable investment. To give some perspective, this is what the company said in its most recent quarterly report:
“The company continues to develop its projects and does not generate revenue from operations.”
Did you catch him? Lithium of the Americas is not generating any revenue at this time. The reason for making this list is that the company has a hand in several lithium projects that may end up being of interest to them in the coming years. Investors should be aware of the potential of these projects.
Here are some of the highlights of the project:
- Work is underway to build its Cauchari-Olaroz mine in Argentina. The company is targeting mid-2022 to begin utilizing 40,000 tons of lithium carbonate equivalent (LCE).
- Early-stage construction is expected to begin in the first half of 2022 for the company’s Thacker Pass site in Nevada. The Americas own 100% of the mine, which it says is the “largest known source of lithium” in the United States.
- Lithium Americas just purchased Millennial Lithium in Canada, giving the company the Pastos Grandes mine, another lithium project in Argentina. The company said construction would begin in 2024 and that it could produce 24,000 tons of battery-quality lithium carbonate annually over the next four decades.
It is worth emphasizing that lithium of the Americas is not a stock for everyone. But if you are investing in the lithium market, then at least keep an eye on the upcoming production projects of this company.
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3. Livent Corp. (NYSE: LTHM)
- Livent Corp. (NYSE: LTHM)
- the price: $22.25 (as of Feb 4, 2022)
- Market Capital: $3.595B
If you’re interested in playing pure lithium, Livent might be your inventory. The company separated from its parent company, FMC corp., just a few years ago. In the coming years, Livent will rapidly expand its lithium production.
Several of the company’s lithium-ion site locations, including the Bessemer project and its sites in Argentina, are expected to increase production capacity in the coming years. The result could be a doubling of Livent’s lithium production by the end of 2024 – and more than tripling its current capacity after that year.
Currently, Livent is working through supply chain issues. “Most of the improvement in prices realized compared to the second quarter was offset by higher costs and the impact of supply chain issues,” Livent’s management said in the third quarter of 2021.
However, these supply chain problems will not last forever. And the company’s sales continue to be on the upside, despite the problems. Livent management estimates that sales for the full year of 2021 will be 39% higher than they were in 2020, midway through guidance.
As with other lithium stocks, the Livent stock price can be a bit volatile. But if you are looking for a complete lithium company, Livent should be on your radar.
4. Ganfeng Lithium (OTC: GNEN.F)
- Ganfeng Lithium Co., Ltd. (OTC: GNEN.F)
- the price: $16.29 (as of Feb 4, 2022)
- Market Capital: 28,885 billion dollars
With a market capitalization of $175 billion, this China-based lithium juggernaut has benefited from the expansion of the electric vehicle market in China and is already the largest lithium producer in the country. Ganfeng is a major supplier of lithium to electric vehicle producers in that country, as well as to Tesla.
While Ganfeng has already worked with Tesla in the past, the company signed an expanded deal with the EV car maker at the end of 2021 that will allow it to supply lithium to Tesla through 2025.
The company is not only in a leading position in the lithium market in China, but Ganfeng is also delivering some impressive financial results. The company’s net profit rose 648% in the first nine months of 2021.
Investors have already noticed Ganfeng’s success and have driven the company’s stock price up 780% over the past three years. It’s hard to predict how well its stock price will perform in the coming years, but there’s no denying that Ganfeng will continue to lead the shipment of lithium in China.
5. Chilean Chemical and Mining Society (NYSE: SQM)
- Society of Chemistry and Mining (NYSE: SQM)
- the price: $53.27 (As of February 4, 2022)
- Market Capital: $15.216B
Last but not least, Sociedad Quimica y Minera de Chile, often referred to as SQM. The company is headquartered in Chile and is diversified across the markets for lithium, potassium nitrate, iodine and solar thermal salts. But let’s focus on the lithium opportunity for the company.
SQM said in its third-quarter 2021 earnings report that the lithium market is “exceeding our previous expectations” and that the company’s expansionary lithium projects should help further strengthen its market position.
SQM will reach approximately 100,000 metric tons of lithium sales volume in 2021 and then accelerate these sales to 180,000 metric tons by mid-2022.
“We now expect demand in the lithium market to grow by nearly 50% this year, driven by strong sales of electric vehicles in all relevant markets, particularly China and Europe,” management said in the report.
Potential investors will also be pleased to know that earnings per share from SQM in the first nine months of 2021 rose more than 148% from the previous period.
SQM’s strong position in the lithium market, combined with its expanding operations and rising lithium prices, means this stock could be a good long-term bet for investors looking for a diversified lithium company.
Why invest in lithium stock?
The demand for battery electric vehicles will rise over the next two decades. This will create a huge need for lithium. Thanks to research by eMarketer, here are a few reasons why lithium stocks might be beneficial:
- More than two-thirds of all passenger cars sold in 2040 will be electric vehicles.
- The US government wants 50% of new cars to be electric vehicles, hydrogen fuel cells or plug-in hybrid models by 2030.
- A few automakers have already said they will go fully electric within the next decade, including Volvo and Mercedes-Benz.
- Automakers in the three largest auto markets — the United States, Europe and China — have pledged to move toward electric vehicles.
ETF lithium stock
Choosing individual stocks to invest in is not for everyone. Making a list of potential stocks can be tricky, doing research on each company, and then keeping up with the stock after investing in it.
Therefore, if choosing a lithium stock to invest in is daunting, you may want to consider purchasing a lithium exchange-traded fund (ETF) instead. ETFs give you exposure to the market without having to select a specific stock. It can be a good way to diversify your investment.
If that sounds attractive, then Global X Lithium & Battery Tech ETF (NYSEMKT: LIT) It might be a good option. This ETF includes companies that are involved in anything from lithium mining and refinery to battery production. Its holdings vary across many countries around the world.
Over the past five years, the Global X Lithium & Battery Tech ETF has increased returns by more than 200%, double The S&P 500 gains over that period.