Lithium is a mineral commonly found in the earth’s crust and is undoubtedly one of the most interesting and promising metals today. This metal is mainly used to manufacture batteries, crucial to producing electric cars and renewable energy storage systems. Lithium has the potential to be used in a variety of different industries, including clean energy, transportation, and health care.
The demand for lithium continues to grow as the demand for electric vehicles and other devices that use lithium-ion batteries continues to increase. Increasing demand for Lithium has helped drive up the prices of lithium stocks until 2021. However, the current prices have shown a downward trend during mid-2022 due to interest rate hikes and looming recession fear amongst investors.
Lithium stocks are a hot investment commodity. Why?
1) Lithium is a key ingredient in battery cells for electric vehicles, home energy storage, and other applications.
2) The global lithium market is estimated to grow from $5.8 billion in 2017 to $15.8 billion by 2027 at a Compound Annual Growth Rate (CAGR) of 12%.
3) Lithium prices are highly volatile, but they have risen sharply in recent years as the demand for electric vehicles has increased and the stock market has become more speculative.
Outlook on overall Lithium Stock price in the coming years
The cost of metals used in lithium rechargeable batteries is exceptionally high. Prices for precious metals like cobalt and other metal nickel have increased by over 30% and 40%, respectively, over the last year.
In addition, Lithium’s price has been steadily increasing for the past few years. As a result, it is expected that the price of Lithium will continue to increase.
Therefore, it is likely that the demand for Lithium will continue to grow in the long term. On top of that, many investors are currently investing in battery technology companies because they expect lithium prices to continue to increase. Hence, there will be an increase in demand for battery technology companies and lithium stocks in the future.
How does the Interest rate impact Lithium stocks?
The interest rates impact lithium stocks in a few ways. For starters, when interest rates increase, the cost of borrowing money to purchase lithium stocks goes up. This makes it more expensive for investors to buy and hold these stocks, leading to decreased demand and lower prices.
Additionally, when interest rates are low, it becomes more affordable for individuals and businesses to borrow and invest in lithium stocks. This could lead to an increase in demand and higher prices. However, if interest rates stay low for an extended period, this could lead to decreased demand as investors become less interested in investing in these stocks.
Six top Lithium Stocks to buy in 2023
1. Albemarle Corporation
Albemarle Corp. is one of the larger lithium miners in the world, and it also produces a variety of other metals from its mines. The company is well-positioned to take advantage of the growth in the battery market and other emerging technologies.
Albemarle Corporation is a major lithium producer in Chile, Argentina, and Australia. The company has a strong balance sheet with over $1 billion in cash and short-term investments as of June 30, 2016.
Albemarle is also one of the few lithium producers with significant production capacity to meet the expected demand growth for the battery industry. Based on these factors, Albemarle Corporation is a good choice for investors looking to invest in lithium stocks.
Twenty-one analysts predict a 12-month price for Albemarle Corp with a median target of $289, a high estimate of $368, and a low estimate of $135.
The closing share price of Albemarle Corp as of Friday, Dec 09, 2022 – is $253.25.
– Price forecast data was collected from https://money.cnn.com
2. Fortive Corp (FTV)
Fortive Corp is another prominent player in the lithium market, with operations across five continents. The company has invested heavily in research and development over the past few years, which should help it stay ahead of competitors.
Eighteen analysts predict a 12-month price for Fortive Corp with a median target of $69.5, a high estimate of $87, and a low estimate of $57.
The closing share price of Fortive Corp as of Friday, Dec 09, 2022 – is $65.72.
– Price forecast data was collected from https://money.cnn.com.
3. Lithium Americas Corp
Lithium Americas is a small lithium mining company also involved in manufacturing. However, it may have more potential to grow than some of its bigger competitors due to its strong execution track record and focus on innovation.
Eleven analysts predict a 12-month price for Lithium Americas with a median target of $38.02, a high estimate of $44, and a low estimate of $27.15.
The closing share price of Lithium Americas as of Friday, Dec 09, 2022 – is $23.22.
– Price forecast data was collected from https://money.cnn.com.
4. Livent Corporation (LTHM)
Livent Corp is a lithium miner and battery manufacturer. North America, Europe, and Asia are the regions where the firm operates. Livent Corporation was founded in 2006 and is based in San Francisco, California.
The company has a market cap of $1.5 billion and employs approximately 2,000 people. Livent Corporation produces lithium-ion batteries for electric vehicles, portable electronics, and other applications. This lithium company deals mainly with LIB1260 battery packs for electric cars.
Thirteen analysts predict a 12-month price for Livent Corporation with a median target of $31, a high estimate of $44, and a low estimate of $24.
The closing share price of Livent Corporation as of Friday, Dec 09, 2022 – is $23.80.
– Price forecast data was collected from https://money.cnn.com.
5. Ganfeng Lithium stock
Ganfeng Lithium is a Chinese lithium producer. The company has been operating since 2004 and produces lithium carbonate, hydroxide, and oxide. In 2013, Ganfeng acquired a lithium brine mine in Chile from Albemarle Corporation for $1.75 billion. The company’s primary market is the Chinese domestic market.
The price forecast for Ganfeng Lithium stock has a median target of $110, a high estimate of $128.57 and a low estimate of $74.29.
The closing share price of Ganfeng Lithium as of Friday, Dec 09, 2022 – is $8.79
– Price forecast data was collected from https://wsj.com.
6. Piedmont lithium stock
One company that has made a massive impact on the lithium market is Piedmont Lithium. They have developed a process that allows them to extract Lithium from salt flats using less energy than traditional methods. This has given them an edge over other companies, and they are now one of the world’s leading producers of lithium products.
Eight analysts predict a 12-month price for Piedmont Lithium Inc. with a median target of $93.50, a high estimate of $132.00 and a low estimate of $85.00.
The closing share price of Piedmont Lithium as of Friday, Dec 09, 2022 – is $56.01
– Price forecast data was collected from https://money.cnn.com.
Few more Lithium Batteries Stocks in the United States:
- NextEra Energy Inc. (NEE)
- Solid Power Inc. (SLDP)
- Honeywell International Inc. (HON)
- Freyr Battery SA (FREY)
- QuantumScape Corp. (QS)
Important points to remember while investing in Lithium Stocks
- When investing in lithium stocks, always research and consult a financial advisor.
- Lithium stocks are a volatile investment and can be highly risky.
- Lithium stocks are often associated with technology stocks and can be sensitive to changes in the tech industry.
- Lithium stocks are often highly speculative and can be subject to sudden price fluctuations.
- Doing your research before investing in lithium stocks is essential, as a high degree of risk is involved.
You can consider investing in Lithium ETFs too.
The global lithium market is expected to grow at a CAGR of 7.5% through 2021, according to a report by MarketsandMarkets.
Lithium is a critical element in developing electric vehicles and batteries, and its demand is expected to increase as the number of electric vehicles increases. This has led some investors to consider buying lithium ETFs to gain exposure to this growing market.
There are three main types of Lithium ETFs.
Three main types of Lithium ETFs exist: physical, synthetic and proxy. Physical ETFs invest in real lithium assets, such as mining operations or production facilities.
Synthetic ETFs are security-based products that use derivatives such as futures or options contracts to track price movements in lithium prices.
Proxy ETFs are a hybrid between the two, investing in both physical and synthetic assets.
Lithium ETFs offer an attractive way for investors to gain exposure to this growing market without committing any capital upfront. However, it’s important to research which ETFs are available and understand the associated risks before investing.
5 Lithium ETFs to consider in 2023
1. SPDR S&P Lithium ETF (LIT)
The SPDR S&P Lithium ETF (LIT) exposes investors to a broad range of lithium stocks. The ETF comprises the top 25 companies ranked by market capitalisation in the lithium industry.
This wide selection helps to ensure that LIT provides a good mix of large and small lithium stocks. Additionally, LIT features an expense ratio of only 0.60%. This makes it one of the lowest-cost options for investors seeking exposure to the lithium industry.
2. iShares S&P Lithium Trust (LIT)
The iShares S&P Lithium Trust (LIT) is a trust that invests in lithium stocks. The trust has a current expense ratio of 0.99%. The ETF has an expected return of 8.6% over the next year and 9.4% over the next five years.
3. VanEck Vectors Lithium ETF (LIT)
VanEck Vectors Lithium ETF (LIT) provides exposure to the lithium market through the ownership of securities in companies that extract, process, and sell lithium-based products. The ETF has an expense ratio of 0.50%.
The lithium market is expected to grow rapidly in the coming years as the demand for electric vehicles increases. The VanEck Vectors Lithium ETF (LIT) offers exposure to a growing industry with low expenses and a strong balance sheet.
4. First Trust Nasdaq Global Lithium ETF (LIT)
The First Trust Nasdaq Global Lithium ETF (LIT) exposes the global lithium market by investing in a diversified mix of companies worldwide. The fund has an expense ratio of 0.60% and comprises nearly 60 holdings.
5. Global X Lithium & Battery Tech ETF
The Global X Lithium & Battery Tech ETF (LITB) was launched in January this year and comprised nearly 50 stocks.
Frequently Asked Questions (FAQs):
What are the world’s largest lithium producers?
With 8 metric tons, Chile is considered the world’s largest lithium reserves. South America and Australia are the other countries with significant amount lithium reserves.
Is Lithium a Good Investment?
With the growing global demand for EVs, Lithium demand is also on the rise, and so are the lithium stocks. The global lithium market is estimated to grow at a CAGR of 12% by 2027. It can be a profitable investment option from a long-term perspective.
What is Thacker pass?
Thacker pass is the largest lithium resource in the United States. This would be the next large-scale mine for Lithium.
Will Lithium prices crash?
According to analysts, the price of Lithium is expected to hit $54,000 per metric ton this year. However, they think the price will drop to $11,000 per metric ton by 2024, which is just twice the 2020 level.
Is Lithium the new gold?
Lithium-ion batteries are set to power the next generation of electric vehicles, and Lithium could become as precious as gold in the coming years.
