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Tap Into the Lithium Boom With These 3 Top-Ranked Stocks
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With a growth potential that’s challenging to measure, the electric vehicle (EV) market is undoubtedly one of the most exciting stories unfolding over the last several years.
And it goes without saying that investors have a massive opportunity to profit from the industry's growth trajectory over the next decade.
However, instead of investing in companies producing EVs, investors can tap into the industry from an entirely different angle by investing in companies that manufacture the materials required for EV production.
One material relied on heavily is lithium, a critical component of EV batteries.
Three highly-ranked stocks with established lithium operations – Albemarle (ALB - Free Report) , Livent , and Sociedad Quimica Y Minera (SQM - Free Report) – could all be considerations for investors to tap into the vital resource.
Below is a chart illustrating the share performance of all three companies in 2022, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a deeper dive into each one.
Albemarle
Albemarle is a leading producer of highly-engineered specialty chemicals with three reportable segments: Lithium, Bromine, and Catalysts.
Analysts have been bullish regarding ALB’s earnings outlook, helping to push the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Albemarle carries a strong growth profile; earnings are forecasted to climb a triple-digit 430% in its current fiscal year (FY22) and a further 32% in FY23.
The projected earnings growth comes on top of forecasted revenue upticks of 124% and 32% in FY22 and FY23, respectively.
Image Source: Zacks Investment Research
In its latest quarter, ALB’s Lithium segment witnessed net sales grow a spectacular 178% Y/Y to $892 million, driven by favorable market pricing from contract renegotiations.
ALB also provided a favorable outlook for the segment – Lithium FY22 adj. EBITDA is expected to climb a triple-digit 500-550% year-over-year, up from its previous outlook.
Pay attention to ALB’s upcoming quarterly print on November 2nd after the market close; the Zacks Consensus EPS Estimate of $6.84 suggests Y/Y earnings growth of more than 550%.
Sociedad Quimica Y Minera
Sociedad Quimica Y Minera is one of the world's largest lithium producers, with one of the industry's least impactful water, carbon, and energy footprints. SQM sports a Zacks Rank #1 (Strong Buy).
For those seeking an income stream, SQM’s got that covered; the company’s annual dividend yields a sizable 4.9%, visibly higher than its Zacks Basic Materials sector average of 3.7%.
Further, the company has impressively upped its dividend ten times over the last five years, translating to a substantial 26.1% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Valuation multiples don’t appear stretched; SQM’s 7.5X forward earnings multiple is a fraction of its 25.1X five-year median and nowhere close to 2021 highs of 58.1X.
SQM sports a Style Score of a B.
Image Source: Zacks Investment Research
In its latest quarter (Q2 2022), SQM’s lithium operations raked in $1.8 billion, reflecting a sizable 28% sequential increase and an almost unbelievable 1030% Y/Y uptick from Q2 2021.
In addition, lithium sales volumes were up 41% Y/Y, and prices grew 701%.
Keep an eye open for SQM’s upcoming quarterly print on November 16th; the Zacks Consensus EPS Estimate of $3.32 suggests an 800% Y/Y uptick in quarterly earnings.
Livent
Livent is a fully-integrated lithium company manufacturing lithium for applications in batteries, agrochemicals, aerospace alloys, polymers, and various industrial applications.
The company has witnessed several positive earnings estimate revisions over the last several months, helping land the stock into a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
In its latest quarter, the company raked in $219 million in revenue, penciling in a 52% sequential increase and an even larger 114% Y/Y uptick. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Like the stocks above, keep close tabs on Livent’s upcoming quarterly report slated to come after the market close on November 1st; the Zacks Consensus EPS Estimate of $0.41 suggests Y/Y earnings growth of more than 1200%, undoubtedly impressive.
Bottom Line
When thinking of EVs, Tesla (TSLA - Free Report) undoubtedly comes to the front of many minds for valid reasons.
However, investors can take a different approach by investing in companies that produce the materials required for EV production, such as lithium.
The metal has become of utmost importance, leading many to call it “white gold” due to its color.
For investors looking to tap into the lithium boom, all three stocks above – Albemarle (ALB - Free Report) , Livent , and Sociedad Quimica Y Minera (SQM - Free Report) – could be considerations.
All three have established lithium operations and carry a strong Zacks Rank, telling us that their near-term business outlook is bright.
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Tap Into the Lithium Boom With These 3 Top-Ranked Stocks
With a growth potential that’s challenging to measure, the electric vehicle (EV) market is undoubtedly one of the most exciting stories unfolding over the last several years.
And it goes without saying that investors have a massive opportunity to profit from the industry's growth trajectory over the next decade.
However, instead of investing in companies producing EVs, investors can tap into the industry from an entirely different angle by investing in companies that manufacture the materials required for EV production.
One material relied on heavily is lithium, a critical component of EV batteries.
Three highly-ranked stocks with established lithium operations – Albemarle (ALB - Free Report) , Livent , and Sociedad Quimica Y Minera (SQM - Free Report) – could all be considerations for investors to tap into the vital resource.
Below is a chart illustrating the share performance of all three companies in 2022, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
Let’s take a deeper dive into each one.
Albemarle
Albemarle is a leading producer of highly-engineered specialty chemicals with three reportable segments: Lithium, Bromine, and Catalysts.
Analysts have been bullish regarding ALB’s earnings outlook, helping to push the stock into the highly-coveted Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Albemarle carries a strong growth profile; earnings are forecasted to climb a triple-digit 430% in its current fiscal year (FY22) and a further 32% in FY23.
The projected earnings growth comes on top of forecasted revenue upticks of 124% and 32% in FY22 and FY23, respectively.
Image Source: Zacks Investment Research
In its latest quarter, ALB’s Lithium segment witnessed net sales grow a spectacular 178% Y/Y to $892 million, driven by favorable market pricing from contract renegotiations.
ALB also provided a favorable outlook for the segment – Lithium FY22 adj. EBITDA is expected to climb a triple-digit 500-550% year-over-year, up from its previous outlook.
Pay attention to ALB’s upcoming quarterly print on November 2nd after the market close; the Zacks Consensus EPS Estimate of $6.84 suggests Y/Y earnings growth of more than 550%.
Sociedad Quimica Y Minera
Sociedad Quimica Y Minera is one of the world's largest lithium producers, with one of the industry's least impactful water, carbon, and energy footprints. SQM sports a Zacks Rank #1 (Strong Buy).
For those seeking an income stream, SQM’s got that covered; the company’s annual dividend yields a sizable 4.9%, visibly higher than its Zacks Basic Materials sector average of 3.7%.
Further, the company has impressively upped its dividend ten times over the last five years, translating to a substantial 26.1% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Valuation multiples don’t appear stretched; SQM’s 7.5X forward earnings multiple is a fraction of its 25.1X five-year median and nowhere close to 2021 highs of 58.1X.
SQM sports a Style Score of a B.
Image Source: Zacks Investment Research
In its latest quarter (Q2 2022), SQM’s lithium operations raked in $1.8 billion, reflecting a sizable 28% sequential increase and an almost unbelievable 1030% Y/Y uptick from Q2 2021.
In addition, lithium sales volumes were up 41% Y/Y, and prices grew 701%.
Keep an eye open for SQM’s upcoming quarterly print on November 16th; the Zacks Consensus EPS Estimate of $3.32 suggests an 800% Y/Y uptick in quarterly earnings.
Livent
Livent is a fully-integrated lithium company manufacturing lithium for applications in batteries, agrochemicals, aerospace alloys, polymers, and various industrial applications.
The company has witnessed several positive earnings estimate revisions over the last several months, helping land the stock into a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
In its latest quarter, the company raked in $219 million in revenue, penciling in a 52% sequential increase and an even larger 114% Y/Y uptick. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Like the stocks above, keep close tabs on Livent’s upcoming quarterly report slated to come after the market close on November 1st; the Zacks Consensus EPS Estimate of $0.41 suggests Y/Y earnings growth of more than 1200%, undoubtedly impressive.
Bottom Line
When thinking of EVs, Tesla (TSLA - Free Report) undoubtedly comes to the front of many minds for valid reasons.
However, investors can take a different approach by investing in companies that produce the materials required for EV production, such as lithium.
The metal has become of utmost importance, leading many to call it “white gold” due to its color.
For investors looking to tap into the lithium boom, all three stocks above – Albemarle (ALB - Free Report) , Livent , and Sociedad Quimica Y Minera (SQM - Free Report) – could be considerations.
All three have established lithium operations and carry a strong Zacks Rank, telling us that their near-term business outlook is bright.