With electric vehicle powerhouses like Tesla (NASDAQ:TSLA) getting off to a bad start this year, the concept of best lithium stocks to buy might seem unusually risky. After all, even lithium players have struggled amid the fallout. You could say that EVs represent their best customers.
However, it’s also possible that this juncture may be the ideal time to consider the best lithium stocks to buy. Fundamentally, most research papers emphasize that EVs represent the future of mobility. For example, a recent Bloomberg report pointed out that the market could be headed for 22% growth this year. Also, with demand rising in other parts of the world, lithium may become short in supply.
Finally, it’s worth keeping in mind that the supply demand profile of critical commodities can change rapidly. Just look at uranium. Prior to the supply disruption, the radioactive material was in a glut. Now, people can’t get enough of it. On that note, below are enticing ideas for best lithium stocks to buy.
Albemarle (ALB)
Writing this ahead of the fourth-quarter earnings report of Albemarle (NYSE:ALB) puts me at a distinct near-term disadvantage. However, irrespective of whatever the print might be, ALB stock represents a serious investment in the broader EV space. A global specialty chemicals company, Albemarle operates in multiple segments, including bromine specialties, catalysts and of course lithium.
According to MarketsandMarkets, the lithium metal sector reached a valuation of $2.5 billion in 2023. By 2028, analysts project that the segment could expand at a compound annual growth rate (CAGR) of 20.4%. At the forecast’s culmination, the industry could be worth $6.4 billion. Combined with Albemarle’s other business units, the enterprise appears to be trading at an attractive multiple.
Yes, ALB suffered a steep drop this year. However, it’s now trading at 4.11X trailing-year earnings (without non-recurring items). As well, the price/earnings-to-growth (PEG) ratio sits at 0.4X. Analysts rate shares a consensus moderate buy with a $148 average price target, implying 32% upside potential. Thus, it’s a solid candidate for best lithium stocks to buy.
Lithium Americas (LAC)
A pure-play North American lithium company, Lithium Americas (NYSE:LAC) is a resource company focused on the development of lithium projects in the Americas. Specifically, it owns exploration projects in Argentina along with the Thacker Pass project in Nevada. Thanks to its geographic focus, LAC stock could benefit cynically from brewing international dynamics.
According to the World Economic Forum, the biggest lithium producer is Australia. Annually, it produces 55,416 tons of the commodity, or 52% of global production. However, China comes in third place with 14,000 tons, not too far behind Chile at 26,000. Over the years, the world’s second-largest economy has pivoted aggressively to EVs. Therefore, competition could quickly erupt for supply, making LAC a potentially lucrative idea for the best lithium stocks to buy.
Analysts believe strongly in Lithium Americas’ potential, pegging shares a consensus moderate buy with a $10.91 price target. That implies almost 162% upside potential if the experts turn out to be accurate. However, the company focuses mainly in upstream activities. That’s a fancy way of saying it’s a pre-revenue speculative opportunity.
Piedmont Lithium (PLL)
An emerging name among the best lithium stocks to buy, Piedmont Lithium (NASDAQ:PLL) is strategically located in North Carolina. While the company admits that it’s an uncommon position, Piedmont seeks to completely reimagine and reinvent the conventional lithium supply chain. Fundamentally, the company’s operations depend on the size and richness of the deposits that are part of the Carolina Tin-Spodumene Belt.
As a homegrown outfit, one of its main objectives is to foster responsible lithium hydroxide manufacturing while simultaneously decreasing reliance on foreign sourcing for the EV industry. It’s moving in the right direction. Per the company’s investment highlights screen, Piedmont posted revenue of $47.1 million on sales of 29,011 dry metric tons of lithium concentrate.
Further, management disclosed net income of $22.9 million and adjusted net income of $16.9 million. It also features cash and cash equivalents of $94.5 million as of Sept. 30.
To be fair, while the company is enjoying financial momentum, it’s off to an ugly start in 2024. Nevertheless, analysts hope for a reversal, rating shares a moderate buy with a $48.33 price target, implying 267% upside.
On the date of publication, Josh Enomoto 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.