The 7 Best Lithium Stocks to Play the Battery Boom

The lithium market saw a bumpy start to the year, with prices plummeting and stocks taking a hit. However, amidst the chaos, savvy investors are looking for the best lithium stocks to buy at a substantial bargain. After all, lithium-ion batteries are crucial to powering our journey towards a cleaner future as the electric vehicle market expands.

In addition, according to a McKinsey report, the demand for lithium carbonate equivalent (LCE) is projected to soar by an astonishing 500% to 700% between 2021 and 2030. So, it’s probably the right time to explore these lithium stock gems that could potentially electrify your portfolio over the long run.

Amplify Lithium & Battery Technology ETF (BATT)

Amplify Lithium & Battery Technology ETF (NYSEARCA:BATT)  is one of the top exchange-traded-funds in the green energy space, targeting some of the most popular names in lithium mining and battery technology. It has holdings in 115 different stocks in the aforementioned sectors, positioning its investors right at the heart of the burgeoning EV revolution.

Over 70% of its holdings boast market caps of $10 billion or more, with the bulk of its holdings in basic materials, followed by consumer cyclical and industrial markets. Moreover, the ETF offers a competitive expense ratio of 0.59% and a generous quarterly dividend of 48 cents per share. Its dividend yield of over 3.7% exceeds 70% of the sector.

As the EV market continues to flourish, now could be the perfect time to spark up your portfolio with BATT and capitalize on the surging demand for the best lithium stocks.

Albemarle (ALB)

Another one of the top lithium stocks to buy is Albemarle (NYSE:ALB), a U.S.-based lithium powerhouse that’s coming off a record year. Consequently, it generated over 120% sales growth on a trailing twelve-month basis, a colossal 817% bump from its 5-year average. Moreover, with assets spanning across the United States, Australia, and Chile, ALB will continue solidifying its position as a lithium titan.

ALB’s remarkable growth story has resulted in over a 200% price return for its investors in the past three years. Revenues for the firm have catapulted from $2.4 billion in 2013 to a jaw-dropping $7.3 billion in 2022. More importantly, it’s growing its business profitably, with its 5-year average net income margin at over 14%.

For 2023, the management team projects top-line growth between 55% and 75%, with Tipranks analysts forecasting a staggering 45.6% upside potential from current prices. Furthermore, it offers a dividend yield of 0.8%, making it the perfect cocktail of growth and capital return as one of the top lithium stocks to buy.

American Lithium (AMLI)

American Lithium (NASDAQ:AMLI) is a speculative lithium penny stock with massive long-term potential. With two exciting projects, Tonopah in Nevada and Falchani in Peru, the firm is gearing up to make waves in the niche and rake in enormous profits ahead.

Tonopah is an advanced-stage lithium undertaking, which is one-of-a-kind in terms of cost-efficiency, as confirmed by a recent study posted by Echelon Capital Markets. Furthermore, the firm has a staggering $13 billion to advance this project with aplomb. Also, Falchani is making headlines as the sixth-largest lithium deposit globally, which could turbocharge the company’s top and bottom-line results in the not-so-distant future. Therefore, it would be prudent for investors to keep their eyes open for AMLI as it surges forward toward its quest for lithium dominance.

Lithium Americas (LAC)

Lithium Americas (NYSE:LAC) is poised to become a shining star in the U.S. EV sphere. Its crown jewel, the Thacker Pass in Nevada, is the world’s second-largest lithium mine, with an after-tax net present value of $4.95 billion, potentially becoming a game-changer for the U.S. domestic EV market.

With construction in full swing since March, LAC will kick off production of 40,000 tons of lithium annually by the second half of 2026. Moreover, it aims to double annual production after that to a whopping 80,000 tons. Most recently, it received a massive $650 million investment from General Motors, which should significantly boost the project’s development.

Apart from that, LAC has another ace in the hole, with its Argentinian asset, the Cauchari-Olaroz mine, anticipated to generate an impressive $308 million in annual EBITDA. Mine production will likely kick off later this year, pushing LAC stock to new heights.

Livent (LTHM)

Livent (NYSE:LTHM) is a pure-play lithium maestro that continues to turn heads with its impressive profitability. 5-year averages for its gross profit, net profit, and EBITDA margins are at a stellar 31.4%, 11.6%, and 25%, respectively.

Its mines are in three main locations: Bessemer City, North Carolina; Felix, Argentina; and Zhangjiagang, China. Livent can churn out 5,000 tons of lithium hydroxide annually, excluding its Chinese mine. Upon completion, its Chinese mine could produce a whopping 15,000 metric tons.

Boasting a cost advantage, the firm’s expansion plans are fueled by its lithium carbonate, hydroxide, and chloride prowess. Despite its robust performances over the past several years, it currently trades at 4.8 times sales, roughly 23% lower than its 5-year average. Year-to-date, the stock is up a healthy 14%, which indicates more momentum in a more conducive environment.

Sociedad Quimica (SQM)

Sociedad Quimica (NYSE:SQM) is a Chilean specialty chemicals giant establishing itself as one of the world’s largest lithium producers. It operates in a highly conducive environment in Chile, which boasts abundant lithium reserves and a business-friendly environment, an ideal backdrop for the firm’s thriving operations.

SQM has grown its business phenomenally, with revenues skyrocketing from $1.9 billion in 2019 to a jaw-dropping $10.7 billion in 2022. It continues to post triple-digit growth in lithium sales, benefitting from the surge in demand for the metal across various sectors.

SQM’s A-graded profitability profile is nothing short of dazzling. Its Earnings per share soared by an astounding 585% last year, along with a 730% bump in free cash flows. Add to this a mighty 15.5% dividend yield and a 40% increase in dividend payout growth over the past five years, which positions SQM for long-term success. Also, SQM stock trades at a discount across most of its historical pricing metrics.

Li-Cycle Holdings (LICY)

Li-Cycle Holdings (NYSE:LICY) is a promising lithium player with its trailblazing approach to sustainable resource recovery. As the world scampers for more battery supplies, LICY stands out as one of the key players in addressing resource shortages by reintroducing crucial materials back into the supply chain.

Admittedly, investors in LICY stock have been on a rollercoaster ride since the get-go, with it shedding over 40% in value since its debut. Likewise, the company’s financial metrics, particularly concerning its profit margins, may test your patience. However, its sales grew rapidly, generating close to 84% revenue growth on a trailing-twelve-month basis. Additionally, it has an enviable cash coverage ratio of 1.6 times, effectively managing its debt load. Hence, those with an appetite for high-risk, high-reward businesses should closely monitor this disruptor.