If you have been paying attention to the EV revolution and companies like Tesla (NASDAQ: TSLA) that rely on battery technology, and lithium in particular, you might be wondering what are the best lithium stocks to buy?
Choosing the right stock is no mean feat because you are spoiled for choice. From small cap lithium stocks to Canadian and Australian lithium stocks, the list is seemingly endless.
You could invest in mining stocks directly or derivative plays like electric vehicle manufacturers. Or with all the options, you might prefer to simply select a lithium ETF, like the Global X Lithium ETF (LIT).
No matter how you get exposure to the basic materials sector, what’s indisputable is that lithium is a key ingredient in battery technology, and demand for it stretches from electric vehicle manufacturers to renewable energy sources like wind power turbines and solar powered cells.
So what are the top lithium stocks to buy?
Top Lithium Stocks To Buy: ALBEMARLE (NYSE:ALB)
For direct exposure, Albemarle (NYSE:ALB) is among the top lithium stocks to buy. The company develops and manufactures chemicals and is the largest producer of lithium globally.
Lithium is one of three divisions the company operates (bromine specialties and catalysts are the others), and it’s currently the largest provider of both EV-battery lithium and flame-retardant chemicals.
The company was founded in 1994 and grew through a series of mergers and acquisitions. It has lithium-based activities in five continents, giving it a truly global distribution network. It owns a site in Nevada, which is currently the only location in the U.S. where lithium is mined.
And it plans to double its output over the next five years by spending up to $50 million.
Of course, this site only represents a modest 3 percent of the company’s overall lithium output. And most of its U.S. lithium is used domestically for products like glass and lubricants. But as demand for lithium-containing cathode materials increases, the company will increase its domestic production for American-made EVs.
Albemarle is valued below $20 billion and has a solid annual dividend yield of 0.99 percent. This means it could be one of the best lithium value investments on the market.
Piedmont Lithium Has An Attractive Valuation
Piedmont Lithium (NASDAQ:PLL) is an Australia-based mining company. It announced in December 2020 that it is relocating its headquarters to the United States. This caused the stock price to temporarily dip as investors reacted to the SEC Form 6-K filing.
Its fair market value is near $100, meaning there’s plenty of growth room for investors looking to get in now. And the company raised 1.75 million new shares in late March 2021, which suppressed share prices temporarily and raised $140.1 million for the company.
The company’s cash burn rate of about $12 million per year means it has plenty of cash to do what it needs to continue growing. It also has a commitment to supply over 50,000 tons of spodumene concentrate each year to Tesla (NASDAQ:TSLA), a big customer.
Because of the growing pains in the first quarter, this is a great stock to buy for two- to five-year growth. Share dilution is perhaps the only short-term pain, and the company has great long-term potential.
Earnings going forward are a concern for long-term oriented investors.
Best Lithium Stocks: Sociedad Quimica y Minera de Chile (NYSE:SQM)
Sociedad Quimica y Minera de Chile (NYSE:SQM) is a Chilean chemical company that’s also the largest producer of lithium in the world. The company operates some of the richest lithium deposits in the world, including the Salar Atacama salt flat. Located in the Chilean desert, this is one of the highest concentrations of lithium in the world.
The company’s lithium volumes doubled year-over-year in the past quarter to nearly 26,000 metric tons to meet the growing production of EVs.
Not only that, but the humid desert conditions are also great for evaporation rates. However, it did get fined $30 million by the SEC in January 2017 over improper political payments.
Besides lithium, it is a major producer of chemicals like potassium nitrate and iodine, which diversifies it against changing market conditions. It’s involved in plant-based nutrition, iodine derivatives, and industrial chemicals.
And the company pays a healthy 0.86 percent annual dividend, which makes it attractive to investors seeking liquidity.
This approximately $15 billion company remained stagnant for much of 2021 after nearly tripling in value in 2020. That means it could be a great pickup for those who missed the boat and are seeking growth over the next five to ten years.
Lithium Stocks To Watch: FMC Corp. (NYSE:FMC)
FMC Corp (NYSE:FMC) is a Philadelphia, Pennsylvania-based agricultural sciences company that started in 1883 with insecticides. It diversified for over a century and grew through a series of mergers and acquisitions. However, crop management products (like herbicides, insecticides, and fungicides) make up its main revenue streams.
It entered an agreement with Cyclicla, Inc last year to improve its product efficiency, and it has over 25 new molecules in its chemical pipeline. On top of this, it created a farm intelligence platform to further supplement its business.
The company doesn’t produce lithium, instead using it in its chemical manufacturing processes. Business was disrupted by the pandemic, but FMC still grew net income year over year by 5 percent in the aftermath.
FMC spun off its own in-house lithium operations as Livent Corp (NYSE:LTHM), which is the better lithium play. That Pennsylvania company supplies lithium hydroxide for Tesla and is seeking to extend its partnership beyond 2021.
Tesla is one of few manufacturers using this specific lithium compound for its batteries, so the company’s success hinges entirely on this partnership.
Energizer Holdings (NYSE: ENR) – Global Giant
Energizer Holdings Inc (NYSE:ENR) is a St. Louis, Missouri-based manufacturer and one of the world’s largest battery companies.
The company was making rechargeable lithium batteries long before the EV revolution. Its batteries are found in various sizes and can be used in everyday items, from hearing aids to remotes, smoke detectors, and more.
It’s also involved in automotive batteries ranging from lead acid to AGM, along with power generators and more.
The company is so deeply entrenched in the industry that it’s involved in every type of battery manufacturing. That places it perfectly to analyze and forecast battery trends, and it can leverage this business intelligence to successfully navigate the market.
EVs aren’t the only application of lithium batteries, and the $110 billion global battery market stretches into every aspect of our homes. This is even more true as the Internet of Things (IoT) grows and more household appliances and other items are equipped with computer processors and internet connectivity.
All these powered devices require electricity, and Energizer is a major brand and supplier. The company also pays a hefty 2.38 percent dividend, which makes it very attractive to those seeking high-dividend returns.
As the world moves deeper into a mobile connected world, batteries are more crucial. Energizer reminds us that this applies to all batteries, not just those used in electric vehicles.
Johnson Controls Toshiba Partnership A Boon
Johnson Controls International PLC (NYSE:JCI) is a Cork, Ireland-based company specializing in fire, HVAC, and security equipment for buildings. It’s also a piece of 34 major hedge funds’ portfolios, which signals institutional confidence in the business.
The overall consensus is that the company is a buy, and its partnership with Toshiba to produce lithium-ion batteries is a contributing factor.
The partnership is working to develop low-voltage, dual-battery technology that’s seen as unlocking the next generation of EV battery technology. Using a dual battery setup increases efficiency and improves EV mileage.
Johnson Control’s share prices have been steadily increasing since the 2020 market crash, and the company is continuing to increase its existing market share. Like Energizer, it’s also heavily involved in AGM and other battery types. In fact, it supplies over a third of the world’s lead-acid batteries.
This means it’s perfectly placed to increase orders from auto manufacturers as they convert to EV. It’s already an OEM provider and has those relationships built in. That makes it a lot easier to convince existing customers to start buying its EV products when they come out.
And it can integrate lithium batteries into gas vehicles too. The sky is the limit with this pre-built distribution network.
QuantumScape Has Backing Of Volkswagen
Quantumscape Corp (NYSE:QS) is a San Jose, California-based company that’s pushing for solid-state lithium metal batteries. These batteries are meant to revolutionize the EV battery industry.
Although they greatly improved over the past decade, most EVs still have a range of 300 miles or less. And it takes over an hour to recharge.
These two numbers are enough to keep many people driving gasoline-powered vehicles, even if only hybrid. It takes less than five minutes to refill at a gas station, and there’s a prebuilt network that ensures you can drive wherever you want in the country without running on empty.
Solid-state batteries are meant to tackle this issue by reducing charge times and discharge rates. The company’s batteries are said to charge up to 80 percent capacity in 15 minutes and retain its capacity after 800 charging cycles.
Because of this, it could be the catalyst to making EVs more prolific. Car companies like Volkswagen are invested in the company and believe in this emerging technology. The anode-free design can disrupt the way we make lithium batteries today.
The company went public in late 2020, and the market still isn’t sure exactly how to price it. Its batteries should be complete and market ready in the next five years, and it already has several successful tests under its belt. This company is valued under $12 billion, which could be a huge discount once the product hits the market.
Lithium Stocks ETF: Global X Lithium Battery & Tech ETF (NYSEARCA:LIT)
The Global X Lithium Battery and Tech ETF (NYSEARCA:LIT) is an ETF that’s invested in a wide range of lithium-based companies. This is a diversified ETF that includes many of the stocks listed on this page and more. It’s a great way to invest in the overall lithium market without picking a single stock.
The management fee is 0.75% and the annual fund operating expense is 0.75%.
During our research, it had a beta of 1.04 relative to the S&P 500, which suggests it generally tracks the major market index.
The top 10 holdings of the Global X lithium ETF include:
FMC Corp (NYSE:FMC)
Albemarle Corp. (NYSE:ALB)
Sociedad Quimica y Minera de Chile (NYSE:SQM)
LG Chem Ltd.
GS Yuasa Corp.
Samsung SDI Co. Ltd.
Tesla (NASDAQ: TSLA)
BYD Co. Ltd –
Electric Car Boom Tesla (NASDAQ:TSLA)
Tesla Inc (NASDAQ:TSLA) is an EV maker and the largest car company in the world. You’re likely already invested in it, if not directly than through an ARK fund or the S&P 500.
The company is more than just vehicles too – it built a nationwide charging network and is expanding throughout the world.
And Tesla is one of the biggest solar panel and battery manufacturers. This catapulted it into a $700 billion company and one of the largest in the world.
EnerSys Has Attractive Upside
EnerSys (NYSE:ENS) is a Reading, Pennsylvania-based energy company that manufactures reserve power, battery chargers, accessories, and more. Its lithium-ion technology is the most advanced on the market, and it makes batteries for marine, medical equipment, and more.
The company’s battery technology is being integrated into lift trucks and other industrial equipment that positions it well to benefit from the shift to industrial automation.
Lithium Americas Partnered With Tesla
Lithium Americas Corporation (NYSE:LAC) is a Vancouver, Canada-based lithium production company with two sites in the U.S. and South America.
Each of these sites is lithium-rich, and the company is partnered with Tesla as a buyer for anything it mines.
Lithium Stocks Takeaway
Lithium is used to treat mania episodes for those with bipolar disorder, and it’s the backbone of the EV industry. Everyone from major automakers to the many startups that popped up over the past few years needs lithium for their batteries.
That means global battery production is increasing to match the growth, and it’s expected to grow into a $46 billion industry by 2026.
Analysts believe once domestic automakers overcome the microchip shortage, they’re going to face a lithium shortage. This could drive prices up and make lithium the next big investment strategy, but which are the best lithium stocks to buy?
Each of these lithium companies has diverse product lines but SQM provides the greatest direct exposure to lithium.
FMC Corp is the oldest company of the bunch while Albemarle has enjoyed some of the highest revenue growth rates in recent years.
If you prefer exposure to a stock that relies on lithium, Tesla and other auto-manufacturers who concentrate heavily on electric vehicles are an indirect way to invest in lithium.
For investors who tend to be more conservative, the Global X Lithium & Battery Tech ETF (LIT) offers greatest diversification.
For hands-off conservative investors who prefer a more automated approach, companies like Personal Capital can help you to invest your money in a more diversified manner. Or if you are looking to avoid stock specific risk altogether, you could check out online real estate crowdfunding sites like Roofstock.
Do you have a lithium stocks list? What good lithium stocks have you found? Contact us and let us know.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.