Electric vehicles (EVs) are fast changing the dynamics of the auto industry. More and more cars are getting electrified, and the prospects of this red-hot industry are only going to blossom in the coming years amid the growing climate concerns. The Boston Consulting Group projects EV sales to rise from 12% of the global market in 2020 to 47% in 2025. Thanks to the accelerated adoption of green vehicles, one metal that seems to be grabbing the most attention is lithium.
With batteries being the cornerstone of EV performance and lithium being the most important metal in EV batteries, demand for lithium is bound to skyrocket. Importantly, the lithium space is presently gaining the maximum attention from EV batteries. So, if you want to want to play the e-mobility revolution and are getting confused regarding which EV makers to bet on, consider electrifying your portfolio with key lithium stocks like
Albemarle Corporation ( ALB Quick Quote ALB - Free Report) , Lithium Americas ( LAC Quick Quote LAC - Free Report) , Livent Corporation ( LTHM Quick Quote LTHM - Free Report) and Piedmont Lithium Limited ( PLL Quick Quote PLL - Free Report) . Before we discuss the stocks, let’s glance through the shining prospects of the lithium market.
Per Fortune Business Insights, the global lithium market size is projected to reach $8.24 billion by 2027-end, representing a CAGR of 9.2% over the 2020-2027 time frame. Credit Suisse expects lithium demand in 2025 to triple from 2020 levels. The rising EV penetration will have a trickle-down effect in the supply chain, making lithium more attractive than ever. According to Bacanora Lithium PLC projections, world demand for lithium is anticipated to increase from 305,000 tons lithium carbonate equivalent ("LCE") in 2021 to 675,000 tons LCE in 2023, at a CAGR of 30% through 2020-2023. The global battery demand is forecast to rise 14-fold by the decade-end, with lithium demand estimated at 1.8 million tons by 2030, per Statista.
Given the bright outlook for lithium demand, we highlight why the below-mentioned lithium stocks should be added to your watchlist.
Albemarle: Charlotte-based Albemarle is one of the leading producers of lithium, with battery-grade lithium-producing plants in Europe, Australia, China, Chile and the United States. While Albemarle is not a lithium pure play, it boasts solid lithium assets and is benefiting from higher volumes in the lithium business. The company’s lithium unit accounts for the highest percentage of overall revenues and profits. Albemarle, thus, remains laser-focused on the expansion of its lithium footprint.
In September, Albemarle acquired China’s lithium company Guangxi Tianyuan New Energy Materials. The acquisition assets include a lithium conversion plant, which is expected to start production in 2022, with an annual conversion capacity of 25,000 metric tons of LCE into battery-grade lithium carbonate and lithium hydroxide. Albemarle is investing in high-return projects to drive productivity and is well placed to gain from long-term growth of the battery-grade lithium market.
ALB had liquidity of around $2 billion at the end of third-quarter 2021. The company is also a dividend aristocrat, having raised its annual dividend for 27 straight years. The Zacks Consensus Estimate for Albemarle’s 2022 earnings implies year-over-year growth of 50%. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see
. the complete list of today’s Zacks #1 Rank stocks here Lithium Americas: This Canada-based lithium miner is yet to generate revenues from operations; however, considering its 2022 plans and long-term potential, it would be wise to keep an eye on the stock. Lithium Americas is focused on advancing two significant lithium projects — the Cauchari-Olaroz lithium brine project in Argentina and Thacker Pass project in Nevada — to address the rising global demand for lithium. The Cauchari-Olaroz mine is set to commence production by mid-2022, with operating costs estimated below $3,600 per ton. The permitting process associated with the Thacker Pass project is on track, with a final decision expected by first-quarter 2022.
The acquisition of Millennial Lithium for $400 million is set to reinforce Lithium America’s growth pipeline and provide a compelling growth opportunity close to its Cauchari-Olaroz lithium brine project in Argentina along with significant synergies. LAC’s increased strategic interest in Arena Minerals also strengthened long-term resource development plans in Argentina.
Strong financials with $482 million in cash and cash equivalents (as of Sep 30, 2021) bode well. The Zacks Consensus Estimate for LAC’s 2022 bottom line implies a year-over-year improvement of 92.3%. The stock currently carries a Zacks Rank #3 (Hold).
Livent: Philadelphia-based Livent is the largest vertically integrated pure-play producer of low-cost lithium. This leading lithium producer is a seller to EV original equipment manufacturers and battery makers worldwide. Livent has been extracting Lithium Brine at Salar del Hombre Muerto in Argentina for more than 20 years. It is one of the lowest-cost resources for lithium carbonate, providing the company with a competitive edge. Livent has a current production capacity of around 20,000 metric tons of lithium carbonate, which is expected to double by fourth-quarter 2023.
Livent is currently producing qualified battery-grade lithium hydroxide in the United States (capacity being nearly 10,000 tons) and China (roughly 15,000 tons). Livent remains on track with near-term capacity expansions and a 5,000 metric ton hydroxide addition in Bessemer City. The acquisition of 25% indirect equity ownership in the Québec-based Nemaska Lithium project is also set to aid top-line growth.
LTHM expects strong demand and high lithium pricing to buoy its prospects through 2022. The company had cash and cash equivalents of $195.3 million (as of Sep 30, 2021), representing a strong cash ratio of more than 3. The Zacks Consensus Estimate for Livent’s 2022 earnings implies a year-over-year surge of 173%. The stock currently carries a Zacks Rank #3.
Piedmont: This U.S.-based lithium explorer has not generated revenues yet, but is gaining massive investors’ attention of late due to promising prospects. Piedmont is set to benefit from hard rock lithium assets in three strategic locations including North Carolina, Quebec and Ghana. The company is focused on the development of the Carolina Lithium Project, located in North Carolina — one of the top-notch regions in the world for lithium exploration. The project targets production of 30,000 tons/year of battery grade lithium hydroxide.
Piedmont also holds a 25% stake in Abitibi lithium hub and a 16.52% interest in Sayona Mining. PLL can earn a 50% interest in Atlantic Lithium’s Ghanaian lithium portfolio and owns 9.9% of Atlantic Lithium. Atlantic Lithium is likely to provide additional high-quality SC6 to support North American lithium hydroxide production. A sustainable business model and solid growth pipeline with attractive economics augur well for PLL’s prospects.
As of Sep 30, Piedmont had cash and cash equivalents of $81 million, representing a strong cash ratio of more than 10. The Zacks Consensus Estimate for PLL’s fiscal 2022 and 2023 bottom line implies a year-over-year improvement of 49% and 8%, respectively. The stock currently carries a Zacks Rank #3.