Q1’s Rising Stars: 3 Lithium Stocks for Your Must-Watch List

Stock Market

Electric vehicles and battery storage lead the charge in this full-swing electric revolution. Demand for lithium, a component of lithium-ion batteries, is exploding as a result. Global lithium production is predicted to grow by over 50% to 1.17 million tons this year alone. However, lithium mining and processing still lag far behind projected demand, and more and more automakers plan to invest in EVs over the next few years. This disconnect between lithium supply and battery demand presents a massive investment opportunity for investors looking for lithium stocks.

This article highlights three of the most promising lithium stocks that allow investors to capitalize on this surging market. Though risks exist, the long-term growth runway for these lithium players appears solid. Let’s examine why these stocks might energize portfolios in the years ahead.

Albemarle Corporation (ALB)

Albemarle (ALB) logo on a mobile phone screen

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The first lithium stock on our list produces specialty chemicals worldwide, Albemarle Corporation (NYSE:ALB). The company operates in lithium, bromine, and catalyst segments. The Lithium segment offers lithium compounds in lithium batteries, greases, thermoplastic elastomers, catalysts, organic synthesis, life sciences, and pharmaceuticals. The Bromine segment provides bromine-based products for fire safety, oil and gas, water purification, food processing, and other industrial applications. The Catalysts segment offers hydroprocessing, fluidized catalytic cracking catalysts, and additives in petroleum refining and chemical synthesis. Albemarle serves markets including energy storage, consumer electronics, automotive, lubricants, crop protection, and more.

Albemarle Corporation reported third-quarter net sales of $2.3 billion, a 10% increase year-over-year (YoY). However, net income declined 66.3% to $302.5 million YoY, with quarterly EPS of $2.74 missing consensus estimates by 25.95%. Despite this significant drop attributable to lower lithium index pricing, the company’s size, firm position in the market, and mid-term prospects can more than make up for it.

Analysts are bullish about the stock, giving it a “Strong Buy” consensus recommendation. The high target price is $308 or over 114% of its current trading price. The stock also trades significantly below its current 52-week high and near its recent 52-week low. Wrapping it all up – investors have the opportunity to snag ALB shares at a discount.  

Piedmont Lithium Inc (PLL)

Person holding cellphone with logo of US mining company Piedmont Lithium Inc. (PLL) on screen in front of business webpage. Focus on phone display. Unmodified photo.

Source: T. Schneider / Shutterstock.com

The next company in our stocks list is a developing lithium mining operation in North Carolina, Piedmont Lithium (NASDAQ:PLL). The company aims to supply the electric vehicle market in the United States. Its Carolina Lithium Project encompasses around 3,245 acres northwest of Charlotte. Piedmont also owns two smaller properties totaling 66 acres in Bessemer City and Kings Mountain. The company aims to produce lithium hydroxide for EV batteries cost-effectively and sustainably, focusing on minimizing transportation emissions relative to overseas lithium production.

Piedmont Lithium has announced an investment of CA$2 million (around $1.48 million $USD) to acquire a 19.9% equity position in Vinland Lithium, a private exploration company in Canada. With this agreement, Piedmont can earn up to a 62.5% equity interest in the Killick Lithium Project via staged investments. The 950-square-kilometer lithium exploration property shares some geological similarities with Piedmont’s Carolina Lithium Project. Initial exploration results at the Killick Lithium Project have shown promise.

During the third quarter, PLL generated $47.1 million in revenue and sold 29,011 dry metric tons of lithium concentrate. The company also reported net income of $22.9 million, an adjusted EBITDA of $16.2 million, gross profit of $23.8 million, and a very healthy 50.4% margin. 

Quarterly EPS, however, fell below expectations by over 41%. That said, Piedmont maintained a healthy balance sheet with $94.5 million in cash – and more importantly, it remains on track to meet full-year shipment guidance near 56,500 dry metric tons. 

Meanwhile, analysts agree, rating the company as a “Strong Buy” with a high target of $110, citing over 383% upside potential from current prices. 

Sigma Lithium Corporation (SGML)

lithium (LI) on the periodic table. top performing lithium stocks

Source: Shutterstock

Sigma Lithium Corporation (NASDAQ:SGML) is a Canada-based lithium producer providing high-purity lithium globally. SGML owns four active mining operations: Grota do Cirilo, Sao Jose, Santa Clara, and Genipapo. On top of that, it has additional prospective locations already in the exploration and evaluation phase. Sigma Lithium was recently featured in the COP28 for its Triple Zero Green Lithium, which is produced in Grota do Cirilo. Triple Zero production is achieved by having zero tailings (the often toxic substances that remain after lithium is extracted from the ore), zero carbon (through carbon credits), and zero hazardous substances.

In other news, Chinese EV manufacturer BYD has expressed interest in a potential supply agreement with SGML. Though the company has yet to provide an official announcement, the talks were said to open discussions about a potential joint venture or outright acquisition. 

SGML’s most recent quarterly report showed great promise. Q3’23 was the company’s first revenue-generating quarter after transitioning from an exploration and development company to a lithium producer. Revenue reached $97 million, with lithium production reaching 38,823 tonnes. Meanwhile, net income ended at $36.4 million—which is impressive, considering this is the company’s first operational quarter. The report underlined SGML’s overall efficiency and lowered production costs, which led to a 56% adjusted EBITDA and 37% net profit margin. Excellent operational discipline and great prospects make SGML one of the best lithium stocks to own. 

On the date of publication, Rick Orford 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.

Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.

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