Tesla’s (NASDAQ:TSLA) Elon Musk called lithium the “new oil” and invested in what’s now the largest processor of the element in North America. Indeed, demand for lithium, used for the rechargeable batteries in electric vehicles (EVs), has increased as more people move away from gasoline-powered cars and car manufacturers produce cleaner vehicles.
Lithium is the lightest metal. That makes it ideal and useful for various products, from pacemakers to jets to electric and hybrid vehicles. The metal is being touted as integral to a low-carbon future, and demand is expected to grow double digits over the next half a decade. EVs — the next biggest thing in automotives — will be the primary mover for this demand.
Here are the hottest lithium stocks to watch out for as we gear up into the next few years.
Standard Lithium (SLI)
Standard Lithium (NYSEAMERICAN:SLI) is a near-commercial lithium company developing a portfolio of large, high-quality lithium-brine properties in the U.S. The company runs its main projects from the Smackover Formation — a premier lithium brine resource in Arkansas and Texas. However, SLI is still working on becoming a fully-fledged lithium extraction and purification production.
Since it’s not fully integrated yet, Standard Lithium has a lot of room to adapt and refine its operational strategy. It has already achieved notable success with its first commercial-scale direct lithium extraction (DLE) column at the Demonstration Plant near El Dorado, Arkansas. The project is the only of its kind operating in North America.
On the financial front, the firm is demonstrating good health. For its fiscal third quarter ending in March this year, Standard Lithium announced earnings of ($0.04) per share. That performance topped analyst forecasts of ($0.05) by $0.01. Also, it did not have any term debt or revolving credit at the time. It’s one of the best lithium stocks to consider at the moment.
Rio Tinto (RIO)
Rio Tinto (NYSE:RIO) is a global mining company with more than 150 years of mining and processing experience. Its portfolio of minerals and chemical elements includes iron ore, copper, aluminium, lithium and more.
The company has two main lithium projects. One is the Rincon Lithium Project in Argentina, where it extracts and produces battery-grade lithium carbonate from raw brine. The other is the Jadar Project in Serbia’s Jadar Valley.
Though its share price has been trading sideways for the bigger part of this year, Rio Tinto shows plenty of promise and is one of the best picks for lithium stocks going into the rest of the year.
It has favorable analyst ratings, with 7 out of 10 giving it a Buy or Overweight recommendation. Moreover, HSBC upgraded its rating from Hold to Buy for the firm’s stock this month. At the time, the banking group cited strong Q2 2024 operational performance and Rio’s ability to increase production volumes faster than its competitors.
Sigma Lithium (SGML)
Sigma Lithium (NASDAQ:SGML) is a mineral explorer that supplies environmentally sustainable and high-purity lithium for electric vehicle batteries. The Canada-based company produces Triple Zero Green Lithium from its Grota do Cirilo Project in Brazil. It also has a 100% ownership stake in four mineral properties in the South American country: Grota do Cirilo, Sao Jose, Santa Clara and Genipapo.
The company registered robust results for Q1 of this year, with an 11% rise in lithium prices, and established itself as the world’s second-lowest-cost producer of lithium concentrate. Also, it increased its mineral reserves by 40% and nearly doubled its annual production capacity to 520,000 tons.
And it looks like the company’s fundamentals will get even stronger in the coming years, making it an interesting lithium stock to watch. Its undeveloped project in Brazil is worth $5.1 billion. The company forecasts the project will supply battery-grade lithium for the next 13 years once complete.
On the date of publication, Hope Mutie did not have (either directly or indirectly) any positions in the stocks mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com’s Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.