This year has posed challenges for lithium stocks. After a strong rally, lithium has cooled off, and lithium stocks mirrored this trajectory. However, this correction offers a silver lining. Investors can capitalize on a strategic moment to pinpoint the best lithium stocks poised for future growth.
The undeniable shift towards electric vehicles (EVs) has driven the enduring demand for lithium. Current insights suggest a future where nearly 40% of new car sales will be EVs by 2030. However, there’s a notable discrepancy on the horizon. While the demand for lithium skyrockets, investment in its infrastructure has been trailing. This disparity hints at a potential lithium supply gap by 2035, likely to jump a significant 1.1 million metric tons, or 24%, behind the anticipated demand.
Yet, given these trends, lithium’s trajectory seems upward-bound. With this backdrop, three standout lithium stocks are poised for robust returns.
Lithium Americas (LAC)
In the ever-shifting sands of the stock market, the 37% decline of Lithium Americas (NYSE:LAC) over the past year is likely to raise concerns. However, the company boasts high-quality assets that aren’t just placeholders but are primed to deliver long-term value.
First, Lithium Americas has effectively split its U.S. and Argentina operations, thanks to the approval of shareholders. This strategic pivot isn’t merely cosmetic; it teases an intrinsic value yet to unfold. Upon digging deeper, the Thacker Pass project emerges as a gem. It boasts a post-tax valuation of $5.7 billion and is projected to hit an EBITDA of $1.1 billion by year four, soaring eventually to a commanding $2 billion. Spread over four decades, and we’re talking about a reservoir of untapped long-term value.
Looking ahead, once Thacker Pass starts churning out substantial cash flow, it places Lithium Americas in an enviable position. Given this trajectory, holding onto LAC stock seems both wise and potentially rewarding.
Piedmont Lithium (PLL)
With a slew of contenders in the lithium sector, Piedmont Lithium (NASDAQ:PLL) emerges as a compelling narrative. Its current market valuation rockets past a jaw-dropping $5 billion, with the business looking prime for significant returns. The Carolina project, wholly owned and boasting a net present value of $2 billion, is at the forefront, slated to deliver its first lithium by 2026. Next in line, the Tennessee Lithium project, set to commence production in 2025, is valued at an enticing $2.5 billion post-tax.
Recently, a fresh chapter unfolded for Piedmont. The company heralded its maiden commercial shipment of spodumene concentrate from Quebec, a venture where it holds a robust 25% stake. Notably, more shipments are on the horizon, set to kick off in the third quarter, paving the way for strong revenue streams. Moreover, Piedmont’s financial future over the next few years seems poised to dazzle with exclusive ownership and the inclusion of Carolina Lithium.
Livent Corporation (LTHM)
Livent Corporation (NYSE:LTHM) strides confidently in the specialty chemicals domain. But it’s not just its unique expertise that’s turning heads. TipRanks forecast an impressive 81% price surge for LTHM stock from its current price point. With a median prediction set at $32.75 and buoyed by robust financials, the company’s prospects are intriguing. Additionally, a whopping $235.8 million in second-quarter revenue, a net profit margin of 38.2%, and assets growing at a dizzying 32.7% 1-year compound annual growth rate underscore the company’s financial mettle.
Moreover, a collaboration with Sakuu Corporation aims to pioneer 3D printable lithium-ion batteries. If realized, this innovation could reshape battery production. Also, a $10.6 billion merger with Allkem Limited offers Livent prime lithium ore, bolstering production capabilities.
With lithium prices set to soar and a noteworthy agreement with Ford Motor (NYSE:F), Livent is poised as a stock to monitor the lithium landscape closely.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.