Lithium is an integral component in the production of rechargeable batteries. Over the past few years, the need for environment-friendly sources of energy has become a requisite. Lithium is used in batteries which are used for portable devices, such as smartphones and tablets. It is also being used in developing batteries for electric vehicles, which has seen production levels increase greatly since it first began. Therefore, we bring you the five best lithium stocks to invest.
Investing in lithium is becoming increasingly popular. Joe Biden reiterates his administration’s commitment to producing 80% of U.S. power via renewable energy by 2030. That paves the way for lithium mining and production companies, with lithium stocks continuing to grow.
Nearly all commercial battery-based energy solutions make use of lithium compounds. According to the US Geological Survey, more than 70% of the total lithium production in the world is geared towards batteries.
Albemarle (ALB) is one of the largest providers of lithium for batteries that power electric vehicles. The company produces both types of lithium, carbonate, and hydroxide, and sources it through brine and rock mining operations. In addition, Albemarle also produces a range of lithium products for a range of other industries.
Albemarle is working on expanding its lithium business as the company predicts an increase in demand in the near future. ALB via its UK-based subsidiary, Albemarle Lithium, UK Limited, is all set to acquire Guangxi Tianyuan New Energy Materials. Tianyuan is a lithium converter located in Guangxi, China. This acquisition will help Albemarle to expand its footprint across the globe. Tianyuan’s lithium capacity will enable ALB to help customers achieve their growth and sustainability ambitions.
ALB stock looks super cool, as the fundamentals are exciting to see for an investor. The company has increased its working capital to $976.85 million in the trailing 12 months. Compared to $798.91 million and $719.37 million in 2020 and 2019, respectively. That’s a great sign in supporting short-term objectives.
Debts are also decreasing, which is great for a company with expansion plans. Sales in the last five years have increased only 2.10% but that’s substantial as the industry is in the early stages. The sales will increase with higher demand in the future. The ROE and ROI are also good with 13.90% and 5.60%, respectively. The EPS is expected to increase by nearly 30% in the next five years, which is great.
Sociedad Química y Minera de Chile
Sociedad is a Chilean (SQM) chemical company and is one of the leading global lithium producers. The company has the massive advantage of having one of the largest lithium reserves in its home country. Just like its counterpart, Albemarle, SQM is speeding its expansion of lithium production considering the rising demand. Apart from that, the company also benefits from its production of potassium nitrate and iodine.
Sociedad is focused on increasing capacity, productivity, and deals. The company expects to reach its production to 180,000 metric tons in the next 12-months, which is more than four times than three years ago.
SQM stock has performed exceptionally well this year, with an increase in stock by 53.72% so far. The quarterly sales are up by almost 28.20%. While the EPS in the next five years is expected around 42%. The ROE and ROI are 9.50% and 5.70%, respectively. That is quite good too.
The insiders own around 72.40% stake in SQM stock in comparison to 37.50% owned by institutional investors. That’s a good sign as both insiders and outsiders have high trust in the company and its stock.
SQM’s fundamental looks good, and the company has solid operational capacity. We can see the stock in high ranks in the next few years.
Piedmont Lithium Inc.
Piedmont Lithium (PLL) is a world-class integrated lithium company and is focused on enabling the transition to a net-zero world and the creation of a clean energy economy in America. The company wants to be the largest North American source of lithium hydroxide.
Piedmont recently hired Krishna McVey as Vice President of Human Resources. Ms. McVey brings a broad, multi-dimensional background in human resources to Piedmont. That includes experience in all aspects of labor and employment law and human capital management.
Just like ALB and SQM, PLL is also part of this growing market segment. Piedmont’s primary focus is the development of lithium hydroxide, which is used in batteries for EVs. We know that the EV industry is growing and the demand for lithium is surging along with it. Piedmont’s ambitions look great for the stock in the long term.
If we look at PLL’s data, the stock looks solid. The company has improved its working capital in the last 12-months compared to the past two years. That will greatly help the company to fulfill its urgent needs and increase its production. The working capital in this period has increased to $116 million, up from -190 million and -382 million in 2020 and 2019, respectively. Moreover, the total debt has decreased in the last 12-months compared to the past two years, which is also a great sign.
The EPS for the next year is expected to increase by 36.41%. Analyst firm Wells Fargo recently upgraded its rating for PLL stock to overweight from equal weight and anticipates a price target between $22 and $34.
The next stock in the list of the best lithium stocks in LTHM. Livent (LTHM) is the global lithium technology company that powers the things that power people’s lives. Livent is offering lithium products across different sectors, including polymers, energy and storage battery systems, and aerospace.
The company has performed pretty well in 2021. In the second quarter, Livent’s revenues increased by 11% the quarter over the first quarter. While the change from last year’s quarter is almost 57%. The operating income has also improved from loss in the same quarter last year, which increased from $ $2.2 million loss to $4 million in profit. That’s mainly due to the increasing demand for lithium.
For the full year of 2021, Livent expects revenue between $370 million to $390 million, up from the prior outlook of $335 million to $365 million. The new outlook represents the annual growth of 28% to 35%.
LTHM stock has outperformed most of its industry peers in 2021. The stock has soared over 140% so far. The EPS for next year is expected to rise by almost 162.41%, which we say is quite a possibility based on how things are shaping. The returns are still negative with both ROE and ROI at -1.80%. That will increase with time as the company expands and improves its revenues.
Livent has gathered enough cash to obtain its near short-term objectives. The working capital has increased to $16.10 million in the trailing 12-months compared to negative working capital in 2020 and 2019.
Citigroup has upgraded its rating for LTHM stock from neutral to buy, setting a price target between $25 to $28. At the same time, Piper Sandler has an overweight rating with a price target of $29.
The last stock in the list of the best lithium stocks is FMC. FMC Corporation (FMC) manufactures and sells crop management products to promote fodder health and pest control. The company uses lithium as a raw material in its manufacturing process and is one of the best lithium stocks. The company supplies its products across the Americas, EMEA, and Asia.
FMC has the goal of achieving net-zero greenhouse gas (GHG) emissions by 2035. The company will use science-based targets aligned with keeping the global temperature at 1.5°C above pre-industrial times. The company has committed to set science-based targets through the Science Based Targets initiative. Aligning with the hype in the lithium industry and zero-emission plans of the U.S. government, FMC stock will make upward moves.
FMC stock has pretty decent fundamentals. The quarterly sales have improved by 7.50%, which will further improve in the coming quarters as FMC plans new initiatives. The stock is trading around its major support level in the 52-week period. That puts it in an upside position based on the market circumstances.
The returns are good too, with ROE and ROI at 18.20% and 12.10%, respectively. The institutional ownership is approximately 91.60%, which shows investors’ trust in FMC stock. The average price target is around $122.89. Analyst firm, Mizuho has initiated a buy rating with a $123 price target.
Over the past few years, the need for environment-friendly sources of energy has become a requisite. The increasing demand for lithium will create a massive upside for lithium stocks going forward.