Aug 16, 2022 11:27
As lithium prices trend upwards due to the explosive expansion of the electric vehicle (EV) sector over the next decade, investors are focusing on junior lithium mining stocks to obtain leverage on what will be an explosive run upwards. Due to the dynamic nature of the lithium sector, investing in lithium mining stocks could be an ideal way for investors or businesses to enhance their portfolios. This guide provides an overview of the lithium industry and a comprehensive study of lithium stock stocks.
Essentially, lithium stocks are the shares of companies engaged in the mining or processing of lithium.
In contrast to other metals, such as gold or silver, investors cannot trade lithium as a commodity. Traders can instead gain exposure by investing in publicly traded lithium companies.
As an investor, you can purchase lithium mining shares, stocks of firms engaged in lithium mining, and lithium battery stocks, which represent companies that manufacture lithium-ion batteries.
Lithium has become an indispensable component for the lightweight, high-capacity batteries used in laptops, mobile phones, and electric vehicles (EVs). Frequently, your ability to invest in something will be contingent on stock prices, and the inaccessibility of stocks to persons with fewer investment resources can be problematic. However, you will be relieved to know that lithium stock prices fluctuate, allowing everyone to profit from a potential lithium stock boom.
Before investing, you must be aware of the performance of lithium stocks. Why is investing now so popular, and why is the demand so high?
Tesla first dominated the market for attractive and fashionable EVs, but it is no longer the only manufacturer with this objective. Other automakers are beginning to follow suit. Thus it is inevitable that the need for lithium batteries will expand significantly. So, is it prudent to invest in lithium stock? If you know where to invest it wisely, yes.
When selecting a lithium company to invest in, it is important to examine your purchasing power. There are other possibilities with current pricing as low as $15 if you're not looking to make a substantial investment. Consider stocks such as Albemarle (ALB) for roughly $200 if you wish to make a substantial investment with the expectation of a large increase in the value of a more successful company.
Investing in lithium entails purchasing stocks with the expectation that their value would improve over time.
Among the perks of investing in lithium is the availability of many possibilities. You can:
Invest in indices of commodities. Some indices, such as the Solactive Global Lithium Index, link directly to lithium. These are risk-spreading investment vehicles that track a basket of commodities.
Invest in lithium exchange-traded funds. Exchange-traded funds are pre-packaged solutions that make it possible to buy a variety of stocks exposed to lithium through a single investing instrument. Global X Lithium ETF is a popular lithium ETFs trading vehicle.
Directly invest in lithium stocks. Lithium stock investments provide access to companies directly involved in lithium production, extraction, and distribution. Livent Corp. and Albemarle Corp. are two notable companies, although there are many others.
On the other hand, traders do not make long-term investments in lithium stocks and ETFs. Instead, they hunt for opportunities to profit from the sector's price volatility.
If you opt to trade, you will need a spread betting account or a contract for difference (CFD) account. Spread betting is a tax-efficient account type that allows you to place wagers on the price fluctuations of underlying securities without taking actual possession of the capital. In this case, you are effectively speculating on what will occur to the price and when.
Similarly, CFD traders can benefit from lithium shares even if they do not own the underlying asset. CFDs are simply contracts between buyers and sellers stipulating that the buyer must pay the seller the difference between the asset's value at the time of purchase and its value at the time the contract is executed. CFD contracts do not necessarily evaluate the asset's current value, simply the price difference between the trade's entrance and exit.
Open a trading account on a platform that allows spread betting and CFDs in order to trade with either of these instruments. Then, you must define your plan, including when you will join and leave the market.
Albemarle Corporation, sometimes known as ALB, is a well-known chemical manufacturing company headquartered in Charlotte, North Carolina. It operates Bromine, Catalysts, and Lithium divisions.
If you are looking for the top Lithium stocks, ALB is a viable option. In fact, they are the largest lithium producer in the world, with mines in Australia and Chile. The corporation has a total market valuation of $27 billion. In addition, they earned a return of 53% in 2021.
Since the global production and demand for EVs are soaring, there is a significant chance that their lithium stocks will increase.
Allkem (OROCF, $8.30) is a Buenos Aires, Argentina-based manufacturer of specialty lithium compounds. The company's business portfolio consists of its Olaroz lithium brine and other borax operations in Argentina, its Mt. Cattlin hard-rock lithium operation in Australia, and its Naraha, Japan lithium hydroxide conversion facility.
OROCF expects to triple its lithium output by 2026 and maintain a 10% share of the global lithium market for the next decade.
In its March business update, the company revealed that its mineral resource at Olaroz had been improved 2.5 times to 16.2 Mt lithium carbonate equivalent (LCE) from the 6.4 Mt indicated in its fiscal first-half 2022 update. "Allkem resources at the Olaroz and immediately adjacent Cauchari basins are currently 22.5 Mt LCE in all resource categories," the company stated in a press release, making it one of the greatest lithium deposits in the world.
Al Harvey, an analyst at J.P. Morgan Securities, believes Allkem is well-positioned to "capitalize on the expanding electrification motif" because it works across "all three main lithium compounds."
In addition, Allkem's growth pipeline is "full" since production at Olaroz has more than doubled. In addition, the company's greenfield brine project Sal de Vida in Argentina and James Bay Spodumene project in Canada provide potential growth in the medium term," according to Harvey.
Analysts continue to believe that OROCF is one of the greatest lithium stocks on the market, despite the escalating demand for lithium and resulting price increases.
Lithium Americas is a corporation that focuses on lithium development projects. In particular, the company is advancing the Cauchari-Olaroz lithium brine project in Jujuy, Argentina, and the Thacker Pass lithium project in Nevada. These two businesses are anticipated to be operational by 2023, and the company is well-positioned for expansion as the EV market continues to flourish. Currently, a share of LAC stock costs $23.20 as of 11:30 a.m. ET.
Global lithium consumption would be a primary growth driver for Lithium Americas. By having mines in both Argentina and Nevada, the company will be able to fuel a wide range of electric vehicle (EV) operations. For example, its Nevada facility will have future synergies with the Texas location of Tesla's (NASDAQ: TSLA) Gigafactory as well as SpaceX companies. Due to the need for lithium, Lithium Americas may enter into long-term deals with both of these corporations.
Sigma Lithium Corporation (NASDAQ: SGML) is a Canadian-based mining organization. The company is engaged in the development of hard rock lithium deposits in the Americas and wants to become the most cost-effective provider of lithium batteries to the EV sector. Sigma Lithium Corporation (NASDAQ: SGML) began on-site construction in December to develop the production plant's foundation and infrastructure installation at its Grota do Cirilo project.
Due to its rising momentum and optimistic analyst and investor opinion, Sigma Lithium Corporation (NASDAQ: SGML) is an intriguing lithium stock to buy. In the past twelve months, the stock price has increased by an amazing 270.94% as of April 26. In addition, Canaccord analyst Katie Lachapelle increased her price objective for Sigma Lithium Corporation (NASDAQ: SGML) from $24 to $25 in April and maintained her Speculative Buy rating.
The stakes of hedge funds in Sigma Lithium Corporation are growing (NASDAQ: SGML). Insider Monkey discovered that at the end of Q4 2021, Sigma Lithium Corporation (NASDAQ: SGML) was included in 3 hedge funds' portfolios with a total holding of $11.77 million. Waratah Capital Advisors was the most prominent shareholder among these. This compares to two positions with $8.47 million in stakes in the third quarter of 2021. The sentiment of hedge funds about the stock is optimistic.
Standard Lithium Ltd. (NYSE: SLI) discovers, develops, and processes properties containing lithium brine in the United States. Its flagship project is the Lanxess project in southwestern Arkansas, which consists of nearly 150,000 acres of brine leases.
Standard Lithium Ltd. (NYSE: SLI) stated on February 24 that it has achieved an agreement with LANXESS Corporation to expedite the development of the state's first commercial lithium project, which will be developed at the Lanxess site in El Dorado. Standard Lithium Ltd. (NYSE: SLI) will be in charge of the project's development up to and including the Front End Engineering Design study. Under the terms of the deal, Standard Lithium Ltd. (NYSE: SLI) will get at least 51% of the equity and may retain up to 100% of the project's shareholding.
Cole McGill, an analyst at Stifel, restarted coverage of Standard Lithium Ltd. (NYSE: SLI) in March with a Buy rating and a Canadian $13 price target. The analyst feels that the company is well-positioned to reap the benefits of recent government regulations that encourage local sourcing of essential minerals. In addition, Standard Lithium Ltd. (NYSE: SLI) is enjoying strong trade volumes, and its trailing twelve-month returns as of April 26 are 93.99%.
Livent is a U.S.-based lithium company whose primary focus is lithium hydroxide production. It presently owns only one mine in Argentina, which annually produces up to 25,000 metric tons of lithium hydroxide. This output places the company among the top five lithium hydroxide manufacturers.
Nonetheless, perhaps what makes Livent more alluring is that it is a significant supplier to electric vehicle (EV) behemoth Tesla (NASDAQ: TSLA). This partnership should endure through 2021. With a 95% increase in its stock price over the previous year, LTHM is one of the most successful lithium stocks.
But there's more. In recent quarters, Livent has also been laying the groundwork for expansion. For instance, it recently purchased a stake in bankrupt lithium miner Nemaska Lithium, which operated a massive mine. This partial acquisition will assist the company in expanding its position in North American and European markets.
All things considered, Livent's recent strategic investments and relationship with Tesla position them to capitalize on rising lithium demand.
Ganfeng Lithium is the largest lithium mining in China. Ganfeng handles lithium throughout the entirety of the manufacturing process. They primarily mine lithium from a large deposit in Australia, and the lithium ore is then refined and processed by deep salt processing and lithium metal smelting. Finally, they make lithium-based batteries and recycle lithium from used batteries.
As one of the leading lithium stocks, Ganfeng Lithium enjoys a number of benefits. They are well positioned to service China's rapidly expanding EV sector. In addition, they own substantial financial reserves and profit margins. While Ganfeng Lithium's stock is traded on the Hong Kong and Shenzhen stock exchanges, U.S. investors can buy shares on the over-the-counter (OTC) market.
The Philadelphia, Pennsylvania-based FMC Corporation operates as a diverse chemical firm. The corporation had $4.6 billion in revenue and $551 million in net income in 2021.
The company reported adjusted earnings per share of $6.19 in 2018, up 2% from 2019. The stock also yields a dividend of 1.8%.
FMC is more of a producer of crop chemicals than lithium.
While the business held an equity stake of 84.25 percent in Livent, the corporation's former lithium segment, on February 25, 2019, FMC executed a spin-off of the company.
In fact, lithium is not accounted for in the company's future projections.
Looking at Livent Corporation (LTHM) separately will provide a clearer image of a pure, globally integrated lithium stock in the future.
The shares of Australian lithium miner Piedmont Lithium have increased by more than 530% in the past year. The company originally sprang to prominence when it announced an arrangement with Tesla to supply around 33% of its prospective North Carolina mine's 160,000-tonne output.
However, that is not the only factor that makes this business promising. In addition to the arrangement with Tesla, Piedmont Lithium has negotiated an agreement with Sayona Mining (OTCMKTS: DMNXF) to enhance its production capacity and reach. Even though PLL stock is somewhat overpriced, it has enormous potential to become a titan in the lithium industry in the next few years.
Currently in the exploration phase, Piedmont aims to produce 22,700 tonnes of "lithium hydroxide of battery quality." With the lithium hydroxide pricing hovering around $9,000 per tonne, annual operations may generate almost $2 billion. The company might realize its ambition by 2022 and become a big player among lithium stocks if all goes according to plan.
Orocobre is a mineral resource business from Australia that mines lithium and other minerals in Argentina. Its flagship project is the Olaroz Lithium Facility, located in the region of Argentina known as the "lithium triangle." In the previous three months, OROCF stock has increased by almost 51%, demonstrating the company's optimistic growth outlook.
Orocobre struggled during the epidemic, as did many other businesses. However, the company's most recent quarterly statistics indicate that things are returning to normal. In the December quarter, for example, its Olaroz initiative generated record sales volume and a positive gross cash margin. The prior quarter's sales volume increased by 28% to a record 4,345 tons. Similarly, revenue increased 57% to $16.5 million.
Suppose lithium demand continues to expand at the current rate. In that case, lithium stocks are attractive, especially for long-term investors who expect to remain in the market for an extended period of time. By riding the present wave of demand, hysteria, and speculation, investing in publicly traded lithium companies could provide returns that outperform the market.
However, investors must exercise caution. When purchasing any capital, it is essential to examine the current price and what is expected to occur. Numerous lithium mining stocks are excessively expensive relative to their current profitability, indicating reduced future profits.
Aug 15, 2022 16:04
Aug 16, 2022 16:57