3 Millionaire-Maker Lithium Stocks to Hold Through Thick and Thin
There seems to be no better time than now to accumulate potential millionaire-maker lithium stocks. After a big rally, lithium has been in a correction mode. That has translated into a downside for some of the best lithium stocks. However, it’s worth noting the lithium story is not limited to 2023 or even the next few years. The demand for lithium will continue to increase beyond the decade. Therefore, it makes sense to hold lithium stocks for multibagger returns.
Of course, not all stocks will be massive value creators. This column focuses on three millionaire-maker lithium stocks to buy. In terms of fundamentals for the metal, the following point is worth noting. It’s expected the lithium supply gap will be 1.1 million metric tonnes by 2035. That supply represents 24% lower than the demand — enough to underscore the view that lithium will remain in an uptrend.
Let’s talk about three lithium stocks to buy and hold.
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Albemarle (ALB)
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Albemarle (NYSE:ALB) is among the millionaire-maker lithium stocks to buy and hold forever. After a 35% correction in the last 12 months, ALB stock trades at an attractive forward price-earnings ratio of 7.24. This is a gold accumulation opportunity.
It’s worth noting that the correction in ALB stock has been on the back of cooling lithium prices. However, considering the long-term fundamentals for lithium, the best part of the rally for ALB stock is due in the next five years.
Albemarle is well-positioned to capitalize on the industry tailwinds. The company expects lithium sales volume growth at a CAGR of 20% to 30% through 2027. This will translate into revenue growth and cash flow upside.
For the current year, Albemarle has guided operating cash flow of $1.5 billion. I would not be surprised if OCF swells to $2.5 billion in the next two years. With robust financial flexibility, the company is positioned for big capital investments and dividend growth.
Lithium Americas (LAC)
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Lithium Americas (NYSE:LAC) is another name among lithium stocks to buy that has been trending lower. However, with a prized asset, the company is poised to create massive value in the coming years.
It’s worth noting that Lithium Americas commands a market valuation of $2.8 billion. The company’s Thacker Pass project has an after-tax net present value of $5.7 billion. The Cauchari-Olaroz asset in Argentina further adds to the NPV valuation. Clearly, LAC stock is trading at a significant valuation gap, and a big rally is impending.
The company has also received shareholder approval for splitting its North America and Argentina assets into two separate entities. That will unlock value in the coming years.
Specific to Thacker Pass, the company has signed an agreement with General Motors (NYSE:GM). Under this agreement, the latter will be making an investment of $650 million in two tranches.
An important point to note is that GM has signed a binding supply agreement for 100% of lithium carbonate from Thacker Pass (phase one). On production, Lithium Americas has clear revenue visibility.
Piedmont Lithium (PLL)
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Piedmont Lithium (NASDAQ:PLL) stock is a potential multibagger based on the value-unlocking potential of its assets. The correction in the last few quarters shows a good opportunity to accumulate.
As for positive catalysts, the company announced the first commercial shipment of spodumene concentrate from Quebec. Piedmont has a 25% stake in the asset, which marks the beginning of revenue growth for the company.
In another major development, the company has received the final permit required to advance construction at the Tennessee asset.
I must add here that Piedmont has 100% ownership of this asset with a net present value (NPV) of $2.2 billion. Carolina Lithium is another asset with 100% ownership and an NPV of $2.8 billion. These are game-changing assets regarding revenue and cash flow upside in the next five years. With lithium likely to trend higher, the NPV and free cash flow potential will adjust on the upside.
On the date of publication, Faisal Humayun did not hold (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.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
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