We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Play the "White Gold" Frenzy With These 3 Lithium Stocks
Read MoreHide Full Article
With rising awareness about greenhouse gases and their effect on global climate, auto biggies are fast shifting gears to e-mobility and the number of electric vehicle (EV) model launches is rapidly increasing. Per Fortune Business Insights, the global EV market is estimated to reach around $1,318 billion by 2028 from $287 billion in 2020, witnessing a CAGR of 24.3% during the 2021–2028 time frame.
It goes without saying that investors have a massive opportunity to profit from the industry's enormous growth trajectory. However, instead of targeting companies producing EVs, investors can tap the industry from an entirely different angle by investing in companies that manufacture the materials required for EV production.
Many materials are needed to build EVs and companies don’t have in-house operations to manufacture every single one of these critical components. One of the most crucial materials on which the production of zero-emission vehicles is heavily reliant is lithium. The metal has become of utmost significance, leading many to call it “white gold.”
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. So, if you want to want to play the e-mobility revolution, consider electrifying your portfolio with key lithium stocks like Sociedad Quimica Y Minera (SQM - Free Report) , Albemarle Corp (ALB - Free Report) and Livent Corp .
Rosy Prospects of Lithium - The New “White Gold’’
Lithium is a non-ferrous metal, soft to the touch, and carries a white-silvery color. Due to its color and skyrocketing market value, lithium has been termed as the new “white gold.” Per the Trading Economics website, lithium carbonate prices in China have soared from CNY 239,379 ($34,395) a ton as of 2021-end to CNY 567,500 ($81,540) yesterday, rocketing 137% so far this year. Prices have shot up 150% year on year. According to Benchmark Mineral Intelligence data, the index of lithium prices has surged more than 152% year to date.
While lithium prices have been on a tear this year, there’s a solid upside from here as well. The climate bill — also called the Inflation Reduction Act (IRA)— will further spur the EV revolution. The rising EV penetration will have a trickle-down effect in the supply chain, making lithium more attractive than ever.
Importantly, more than half of all the lithium produced is deployed in rechargeable batteries. The lithium space gains the maximum attention from EV batteries. This would only continue to rise in the coming years amid the soaring popularity of green cars and further dwarf the usage of the metal for traditional industrial purposes, including ceramics, polymers and glass ceramics.
Per Statista, global lithium demand is forecast to increase to around 2.5 million metric tons of lithium carbonate equivalent by 2030 from 292,000 metric tons in 2020, majorly driven by the consumption in EV batteries. Per Fortune Business Insights, the global lithium-ion battery market size is expected to reach $193.13 billion by 2028 and register a revenue CAGR of 23.3% during the 2021-2028 time period.
3 Stocks to Ride the Lithium Boom
Sociedad Química: Headquartered in Chile, the company produces and distributes lithium and its derivatives. SQM offers lithium carbonates for various applications that include electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-resistant glass, air conditioning chemicals, continuous casting powder for steel extrusion and primary aluminum smelting process. The boom in lithium has aided the company massively. In the first nine months of 2022, SQM’s lithium operations generated $5.63 billion in revenues, reflecting a mind-boggling 1,064% jump from the year-ago quarter. In fact, lithium sales volumes in the last reported quarter notched a record high for the company. Clearly, momentum has picked up.
The Zacks Consensus Estimate for 2022 earnings and revenues implies a year-over-year jump of 541% and 275%, respectively. For those seeking an income stream, SQM has got that covered too. The company’s annual dividend yields a sizable 8.5%. Further, the company has impressively raised its payout 10 times over the last five years, translating to a substantial 26.1% five-year annualized dividend growth rate. Sociedad Química currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A.
Albemarle: Charlotte-based Albemarle is one of the leading producers of lithium, with battery-grade lithium-producing plants in Australia, China, Chile and the United States. The company’s lithium unit accounts for the highest percentage of overall revenues and profits. ALB, thus, remains laser-focused on the expansion of its lithium footprint.With the buyout of the Qinzhou lithium conversion plant in China and the mechanical completion of Kemerton II expansion in Australia, ALB is well positioned to more than double its lithium conversion capacity compared to last year. In October, Albemarle also received a $150 million grant from the Biden administration, with which the company intends to fund the construction of a new lithium concentrator facility at its Kings Mountain location in North Carolina.
The Zacks Consensus Estimate for ALB’s 2022 earnings and revenues implies a year-over-year jump of 420% and 123%, respectively. In the third quarter of 2022, the company’s Lithium segment witnessed net sales growth of a spectacular 318% year over year to $1,501 million, driven by favorable market pricing from contract renegotiations. Volumes rose 20% in the quarter on the back of the La Negra III/IV expansion in Chile. ALB’s favorable outlook for the segment augurs well. The adjusted EBITDA from the Lithium unit is expected to climb 500-550% year over year. The stock currently carries a Zacks Rank #3 (Hold) and has a VGM Score of B.
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. LTHM is on track to deliver on all its announced capacity expansions. A 5,000 metric ton expansion of lithium hydroxide in Bessemer City was completed in the third quarter of 2022. The first 10,000 metric ton expansion of lithium carbonate in Argentina is likely to be completed by year-end. Construction at the Nemaska project in Canada is slated to start in early 2023.
In its latest quarter, the company raked in $231.6 million in revenues, penciling in a 123.5% yearly increase. LTHM expects strong demand and high lithium pricing to buoy its prospects in the upcoming quarters. As such, the company expects revenues in 2022 to be between $815-$845 million, suggesting an uptick from $420 million in 2021. Adjusted EBITDA is envisioned in the range of $350-$370 million, calling for a jump from $70 million recorded in 2021. The Zacks Consensus Estimate for Livent’s 2022 earnings and revenue implies a year-over-year jump of 656% and 99%, respectively. The stock currently carries a Zacks Rank #3 and has a VGM Score of A.
Image: Bigstock
Play the "White Gold" Frenzy With These 3 Lithium Stocks
With rising awareness about greenhouse gases and their effect on global climate, auto biggies are fast shifting gears to e-mobility and the number of electric vehicle (EV) model launches is rapidly increasing. Per Fortune Business Insights, the global EV market is estimated to reach around $1,318 billion by 2028 from $287 billion in 2020, witnessing a CAGR of 24.3% during the 2021–2028 time frame.
It goes without saying that investors have a massive opportunity to profit from the industry's enormous growth trajectory. However, instead of targeting companies producing EVs, investors can tap the industry from an entirely different angle by investing in companies that manufacture the materials required for EV production.
Many materials are needed to build EVs and companies don’t have in-house operations to manufacture every single one of these critical components. One of the most crucial materials on which the production of zero-emission vehicles is heavily reliant is lithium. The metal has become of utmost significance, leading many to call it “white gold.”
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. So, if you want to want to play the e-mobility revolution, consider electrifying your portfolio with key lithium stocks like Sociedad Quimica Y Minera (SQM - Free Report) , Albemarle Corp (ALB - Free Report) and Livent Corp .
Rosy Prospects of Lithium - The New “White Gold’’
Lithium is a non-ferrous metal, soft to the touch, and carries a white-silvery color. Due to its color and skyrocketing market value, lithium has been termed as the new “white gold.” Per the Trading Economics website, lithium carbonate prices in China have soared from CNY 239,379 ($34,395) a ton as of 2021-end to CNY 567,500 ($81,540) yesterday, rocketing 137% so far this year. Prices have shot up 150% year on year. According to Benchmark Mineral Intelligence data, the index of lithium prices has surged more than 152% year to date.
While lithium prices have been on a tear this year, there’s a solid upside from here as well. The climate bill — also called the Inflation Reduction Act (IRA)— will further spur the EV revolution. The rising EV penetration will have a trickle-down effect in the supply chain, making lithium more attractive than ever.
Importantly, more than half of all the lithium produced is deployed in rechargeable batteries. The lithium space gains the maximum attention from EV batteries. This would only continue to rise in the coming years amid the soaring popularity of green cars and further dwarf the usage of the metal for traditional industrial purposes, including ceramics, polymers and glass ceramics.
Per Statista, global lithium demand is forecast to increase to around 2.5 million metric tons of lithium carbonate equivalent by 2030 from 292,000 metric tons in 2020, majorly driven by the consumption in EV batteries. Per Fortune Business Insights, the global lithium-ion battery market size is expected to reach $193.13 billion by 2028 and register a revenue CAGR of 23.3% during the 2021-2028 time period.
3 Stocks to Ride the Lithium Boom
Sociedad Química: Headquartered in Chile, the company produces and distributes lithium and its derivatives. SQM offers lithium carbonates for various applications that include electrochemical materials for batteries, frits for the ceramic and enamel industries, heat-resistant glass, air conditioning chemicals, continuous casting powder for steel extrusion and primary aluminum smelting process. The boom in lithium has aided the company massively. In the first nine months of 2022, SQM’s lithium operations generated $5.63 billion in revenues, reflecting a mind-boggling 1,064% jump from the year-ago quarter. In fact, lithium sales volumes in the last reported quarter notched a record high for the company. Clearly, momentum has picked up.
The Zacks Consensus Estimate for 2022 earnings and revenues implies a year-over-year jump of 541% and 275%, respectively. For those seeking an income stream, SQM has got that covered too. The company’s annual dividend yields a sizable 8.5%. Further, the company has impressively raised its payout 10 times over the last five years, translating to a substantial 26.1% five-year annualized dividend growth rate. Sociedad Química currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A.
Albemarle: Charlotte-based Albemarle is one of the leading producers of lithium, with battery-grade lithium-producing plants in Australia, China, Chile and the United States. The company’s lithium unit accounts for the highest percentage of overall revenues and profits. ALB, thus, remains laser-focused on the expansion of its lithium footprint.With the buyout of the Qinzhou lithium conversion plant in China and the mechanical completion of Kemerton II expansion in Australia, ALB is well positioned to more than double its lithium conversion capacity compared to last year. In October, Albemarle also received a $150 million grant from the Biden administration, with which the company intends to fund the construction of a new lithium concentrator facility at its Kings Mountain location in North Carolina.
The Zacks Consensus Estimate for ALB’s 2022 earnings and revenues implies a year-over-year jump of 420% and 123%, respectively. In the third quarter of 2022, the company’s Lithium segment witnessed net sales growth of a spectacular 318% year over year to $1,501 million, driven by favorable market pricing from contract renegotiations. Volumes rose 20% in the quarter on the back of the La Negra III/IV expansion in Chile. ALB’s favorable outlook for the segment augurs well. The adjusted EBITDA from the Lithium unit is expected to climb 500-550% year over year. The stock currently carries a Zacks Rank #3 (Hold) and has a VGM Score of B.
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. LTHM is on track to deliver on all its announced capacity expansions. A 5,000 metric ton expansion of lithium hydroxide in Bessemer City was completed in the third quarter of 2022. The first 10,000 metric ton expansion of lithium carbonate in Argentina is likely to be completed by year-end. Construction at the Nemaska project in Canada is slated to start in early 2023.
In its latest quarter, the company raked in $231.6 million in revenues, penciling in a 123.5% yearly increase. LTHM expects strong demand and high lithium pricing to buoy its prospects in the upcoming quarters. As such, the company expects revenues in 2022 to be between $815-$845 million, suggesting an uptick from $420 million in 2021. Adjusted EBITDA is envisioned in the range of $350-$370 million, calling for a jump from $70 million recorded in 2021. The Zacks Consensus Estimate for Livent’s 2022 earnings and revenue implies a year-over-year jump of 656% and 99%, respectively. The stock currently carries a Zacks Rank #3 and has a VGM Score of A.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.