The Best Lithium Stocks
When you look across the publicly traded lithium market, its hard to find a pure play lithium stock. Even among the lithium producers, each has separate and essential operations in other areas.
Even an ETF focused specifically on lithium casts a wide net in various industries.
On the mining side, you have the Big 3 and a group of Chinese companies working to take a significant share.
In general, the mining side looks somewhat interesting from an economic standpoint due to the inelastic demand for raw materials. However, we note that any kind of mining, including lithium, is generally highly cyclical due to inevitable pricing and demand swings.
Because lithium is essential but not a huge cost driver in battery production, battery makers are unlikely to significantly reduce their consumption even in the face of higher lithium prices.
While miners cannot dictate higher prices alone, they are likely to benefit from higher prices if they come about from supply shortages / faster demand growth.
In our view, SQM and Albemarle look like the most exciting lithium stocks on the mining side due to their premium position in Chile a position offering the deepest reserves coupled with high concentrations and an ideal environment.
On the battery side, finding pure play lithium stocks is even more challenging. There are plenty of companies in the market, but from an investment standpoint, there is still a lot of uncertainty.
What To Consider Before Investing In Lithium
The growing demand for EVs coming from both consumers and government officials indicates theres a rush to produce more lithium. This is a good signal for investors interested in capturing the growing demand for lithium-based batteries and storage solutions.
Before investing in new lithium projects, investors need to understand the risks.
For one, while general adoption of electric vehicles are a positive step towards mitigating climate change, the process of actually extracting the lithium needed to power EVs poses its own environmental risk. However, as the technology becomes more sophisticated and reusable lithium batteries come into play, the carbon footprint and local damage of mining lithium could shrink in the future. Regardless, climate-minded and socially responsible investors may want to take this into account before considering adding Lithium companies to their portfolio.
Secondly, future environmental regulation could also impact a projects output. Likewise, new companies entering the lithium rush face competition from Albemarle and SQM which hold significant market share.
Concentration in the market is another factor investors need to consider. Tesla is a major consumer of lithium batteries and many of the producers listed above have contracts with Tesla. While Tesla is a popular EV stock pick, setbacks in their production schedule could impact lithium producers as well.
Lithium Stocks: Final Thoughts
Most lithium-related stocks have suffered from the revenue growth side and trade heavily based on future growth prospects driven by the green revolution.
Investors should expect these names to be more volatile.
However, despite the potentially larger price swings in the short run, the tailwind of the massive and fundamental shifts in renewable energy is likely to gain even more momentum.
The increasing demand for lithium will continue throughout the next decade.
As more realize the financial incentives for this commodity, we will likely see more investors jump into the market. This makes lithium stocks one of the groups with the most potential for significant price appreciation in the following years.
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Lithium Battery Stock: Toshiba Corporation
Toshiba provides electronic devices and battery storage solutions globally. The company has many businesses outside of battery production, so like Panasonic, Toshiba is not a pure play on lithium or batteries. However, Toshiba has scale and brand recognition in the battery space, selling various electronic devices with lithium-ion battery power cells.
Toshibas revenue has waned in recent years, but the company is under a sale process currently. Earlier this year, Toshiba submitted a proposal to split itself into two publicly-traded, separate entities. That proposal was rejected, and a strategic review was then undertaken. Toshiba received several offers for buyouts, and it appears it will be taken private between $16 and $19 billion, making it one of the most significant private equity deals ever in Japan.
The 7 Best Battery Stocks To Buy In December
As projections point to growth in EV demand, these battery stocks are worth considering
- These are the best battery stocks to buy to benefit from positive industry tailwinds
- Panasonic Holdings : Investment in new battery plants and focused on innovation.
- Albemarle Corporation : Increase in lithium conversion capacity to boost EBITDA growth.
- Lithium Americas : Assets that can deliver robust cash flows when production commences.
- Solid Power : Focused on commercialization of solid-state batteries.
- QuantumScape : Strong financial flexibility with Volkswagen as an automotive partner.
- Ford : Big investments towards EV battery plants through 2025.
- Microvast : Steady growth and a robust backlog through 2030.
Some of the best battery stocks have underperformed this year. The correction has been in-sync with the downside in electric vehicle stocks. There is however no doubt on the point that the best part of growth for electric vehicles is still to come.
Global EV penetration has increased to 8.8% in 2021. Its expected that by 2030, electric vehicles will represent more than 60% of vehicles sold globally. If this target is achieved, battery demand is likely to remain robust in the coming years.
There are some big numbers here as well. The International Energy Agency expects EV battery demand to increase to 3,500GWh by 2030 from current levels of 340GWh. The correction presents a golden opportunity to accumulate some of the best battery stocks.
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Best Lithium Stocks Powering The Future
Lithium is in everything. Things like phones, computers, tablets, smartwatches, and electric vehicles are all powered by lithium-ion batteries.
Meanwhile, the economy appears to be moving away from fossil fuel sources of energy. The United States has pledged to be carbon neutral by 2050, with individual states like California setting a more ambitious goal of being carbon neutral by 2045.
To reach these goals, energy will have to be produced and stored through alternative means. Lithium-based energy storage solutions and thus lithium itself are going to increase in demand. This could make lithium stocks a great investment opportunity for savvy investors looking to capitalize on this shift.
This article will cover some of the biggest players in the lithium market and whether or not you should consider adding lithium stocks to your portfolio.
Should I Buy Lithium Stocks
While investment decisions depend on an individuals preference, risk tolerance, and investing time horizon, the sheer magnitude of the green energy movement is enough to warrant serious interest.
Multiple industries from transportation, energy production, and storage, the smartphone industry, and others make a strong case for investors to allocate a part of their portfolio to lithium stocks.
Just consider the fact that the current penetration of electric vehicles in total car sales globally is still low.
This number is bound to increase substantially, as most main car manufacturers plan to abandon internal combustion engine cars altogether by 2030.
This stance is confirmed by world governments as the European Commission recently proposed a ban for all ICE cars from the year 2035.
At this moment, around 400,000 tons of lithium are mined in a year, which covers approximately 2 million to 3 million electric vehicles. However, only a third of that number goes to EVs right now.
That number will have to increase perhaps as much as tenfold to meet Teslas needs alone, without even taking into account other vehicle makers and their lithium battery requirements.
While most trends inevitably go through up and down cycles, this one is bound to last for several decades based on expert data.
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Solid Power Is Betting On Its Proprietary Sulfide Solid Electrolyte
Solid Power Inc.SLDP is working on a couple of all-solid-state battery designs, including one of the few to use an anode made primarily of silicon. Silicon is lighter than metal and more resistant to damage, making it an attractive alternative. But silicon can swell up to 300% of its original size, creating cracks and significantly decreasing energy storage. Fortunately, because the solid-state design doesnt have the flammable liquids of a standard lithium-ion battery, Solid Power has been able to address that challenge.
What stands out most about its design, though, is the sulfide solid electrolyte. Acting as both an electrolyte and a barrier between the anode and cathode, Solid Powers proprietary sulfide-based solid electrolyte offers good conductivity and simple manufacturability. However, the challenge with using sulfides is that they dont prevent dendrites and they can be unstable. These are both especially big problems in batteries containing lithium. Solid Power says its proprietary electrolyte has been tuned for lithium metal stability.
Featured photo provided by Electrovaya
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Sociedad Quimica Y Minera De Chile
One of South America’s top basic materials and chemical companies, Sociedad Quimica y Minera is one of the world’s largest producers of lithium used in batteries and other energy storage technologies. Like some of the other diversified and well-established mining operations such as Albemarle and Ganfeng, SQM generates healthy double-digit operating profit margins, has plenty of cash to fund expansion, and carries minimal debt.
SQM predicts demand for lithium will outpace supply in 2022, so it has been investing to increase its production capacity. With recent improvements now complete, the company expects to be able to increase its market share in supplying lithium, mainly for EV batteries.
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Electrovaya Is Optimistic Its Solid
As energy capacity needs grow, lithium-ion batteries the best battery technology currently available are rapidly approaching their limits.
Manufacturers are struggling to increase energy capacity without increasing the weight or cost of the battery. Thats why the race is on to develop the markets first solid-state battery one that uses a solid electrolyte in place of the liquid or gel found in lithium-ion batteries.
With multiple companies at the forefront of this emerging technology, the key challenges have been developing a design thats easy to manufacture at scale and functional in the larger format batteries needed for vehicles and storage systems. Electrovaya Inc. EFLVF, already one of the industrys leaders with its safe, long-lasting lithium-ion battery, is optimistic that its innovative hybrid solid-state battery prototype is moving closer to commercialization. Heres how it compares to some of the other leading solid-state platforms in development.
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What Are The Best Lithium Stocks
If you want to focus on EV battery manufacturers, Asia presents the best investment opportunities as this region dominates the EV battery market by a country mile.
Exhibit 4: Worldwide market share of EV battery makers in 2021
Statista
In this article, however, I am focusing on the best lithium stocks overall – not just EV battery manufacturers – which is why I will be introducing high-quality lithium producers that are well-positioned to grow in the next decade as the demand for lithium soars to new highs. After all, these lithium producers have close business relationships with EV battery manufacturers, so investing in these stocks will give an indirect exposure to the Asian battery manufacturing giants. There are many companies in the Asia-Pacific that dominate the lithium market today, but as a fan of investing in under-appreciated, small companies with high growth potential, I thought it best to focus on a combination of relatively smaller players that are strategically well-positioned to grow and established players with opportunities to scale.
Livent Corporation
Albemarle Corporation
Sociedad QuÃmica y Minera de Chile S.A.
Other Ways To Invest In Lithium Companies
Investing directly in lithium companies can pay off handsomely but it does come with risk. Construction setbacks and regulatory red tape can impact an individual companys performance.
Investors looking to benefit from increased demand in lithium production arent limited to just buying individual stocks. Lithium ETFs are also a good, lower risk option. They track the entire supply chain, not just individual lithium producers. These are the top three ETFs to consider:
- Global X Lithium & Battery ETF : This ETF follows the Solactive Global Lithium Index and its top three holdings include Albemarle, SQM, and Tesla.
- Amplify Lithium & Battery Technology ETF : This ETF follows the EQM Lithium & Battery Technology Index and its top three holdings are BHP Group, SQM, and Albemarle.
- VanEck Vectors Rare Earth/Strategic Metals ETF : This one tracks companies producing a range of strategic materials, including lithium.
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Lithium Stocks List: 15 Biggest Lithium Stocks
In this article, we will discuss the 15 biggest lithium battery stocks. If you want to explore similar stocks within the lithium industry, you can also take a look at Lithium Stocks List: 5 Biggest Lithium Stocks.
At a time when the world is at a crossroads with regard to climate change, lithium has risen from once being an inconsequential mineral compared to silver and gold, to being critical in the move against carbon emissions. Characterized as a soft, silver-white alkali metal that is found within brine reservoirs and lithium-containing rocks, such as spodumene, lithium is vital for the production of virtually all traction batteries currently used in EVs as well as consumer electronics. Although electric vehicles have been around for some years now, they have only recently become a more viable option for consumers, thanks to technological advances and a decrease in cost. In tandem, the need for lithium to meet consumer ends has increased as well. Based on a report by the International Energy Agency, the demand for lithium for use in EVs and battery storage is forecast to grow by over 40 times between 2020 and 2040.
Photo by Kumpan Electric on Unsplash
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Best Battery Recycling Stocks
The electric vehicle market is one of the largest emerging markets to date, providing a prime opportunity for investors to cash in by investing in battery recycling stocks.
Currently, lithium ion batteries are among the most common of rechargeable batteries used. These batteries contain heavy metals that may be harmful to the environment if they are disposed of improperly.
To address this problem, battery recycling has become one of the most discussed topics within the electric vehicle industry.
There are plenty of companies stepping up to do their part to make the environment better by recycling lithium ion batteries, and turning a nice profit in doing so.
In this post, Ill explore what battery recycling is, some of the best battery recycling stocks, and much more. Lets get started!
- Li-Cycle Holdings
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Top 11 Lithium And Battery Stocks To Buy Now
In this article we present the list of the top 11 lithium and battery stocks to buy now. If youre in a hurry to see the stocks involved in developing and supporting this future technology, you can jump straight to the 5 best lithium and battery stocks to buy today.
Lithium batteries are primary batteries that have metallic lithium as an anode that is primarily mined in China, South America, and Australia while Chile is the country with the largest lithium reserves worldwide. These types of batteries are also referred to as lithium-metal batteries. They differ from other batteries with their high charge density and high cost per cell unit. Lithium cells can produce voltages from around 1.5V to around 3.7V, depending on the design and chemical compounds that were used in the battery.
They can be used in portable consumer devices such as smartphones, smart watches, and other smart devices. They are also used in electric vehicles ranging from full-sized vehicles such as radio-controlled toy vehicles. These types of batteries require around 0.15 kg to 0.3 kg of lithium per kWh. As they are designed, these primary systems use a charged cathode which is an electro-active material with crystallographic vacancies that are filled gradually during the discharge.
Below we present to you the top 11 lithium and battery stocks to buy now based on our hedge fund sentiment data. These are the most popular lithium and battery stocks among the 800+ hedge funds tracked by Insider Monkey: