Electrify Your Portfolio With These 2 Lithium Stocks
Lithium, a pivotal component in the production of lightweight, high-capacity batteries, is poised to play a crucial role in powering the future. Electric vehicles (EVs) are dependent on lithium batteries and sales of these environment-friendly vehicles are witnessing massive annual growth. Global electric car sales in 2021 more than doubled from 2020. In 2022, sales topped the 10-million-unit mark.The International Energy Agency predicts 14 million EV sales by the end of 2023.EV-Volumes.com anticipates global EV sales, including battery-electric vehicles (BEVs) and plug-in hybrids, to triple from 10.5 million in 2022 to over 31 million in 2027, with expectations to more than double to over 74.5 million units in 2035.
Thanks to the accelerated adoption of green vehicles, the metal that’s 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 play the e-mobility revolution, consider powering your portfolio with lithium stocks like Livent Corp LTHM and Lithium Americas LAC.
World output lithium carbonate equivalent (LCE) in 2022 was 737,000 tons. It is estimated to reach 981,000 tons in 2023 and 1,259,000 tons in 2024, according to the Resources and Energy Quarterly Report by the Australian Department of Industry, Science and Resources in September.
The escalating demand for lithium also reflects governmental initiatives supporting the energy transition and substantial investments in utility-scale energy storage systems (ESS). Per the International Energy Agency, global ESS investment in 2022 more than doubled on a yearly basis. ESS demand for lithium is expected to double again between 2022 and 2025. This growth will be fueled by major economies such as China, the European Union and the United States.
The global lithium market was valued at $37.8 billion in 2022 and is projected to grow to $89.9 billion in 2030. According to Statista, the global demand for lithium will surpass 2.4 million metric tons of lithium carbonate in 2030, doubling the demand forecast for 2025.
Given the shining prospects of the EV industry and the bright outlook for lithium demand, we highlight why the below-mentioned lithium stocks merit inclusion in your watchlist.
Livent: Philadelphia-based Livent is the largest vertically integrated pure-play producer of low-cost lithium. Livent has been extracting Lithium Brine at Salar del Hombre Muerto in Argentina for more than 25 years.
The company is progressing with its 20,000 metric ton lithium carbonate expansion in Argentina, with the first 10,000 metric ton phase completed. It is set for commercial volumes in the first quarter of 2024. Commercial volumes from the second phase are expected in the second half of 2024. Simultaneously, lithium hydroxide expansions in the United States and China are on schedule. Livent's 5,000 metric ton hydroxide unit in Bessemer City is operational and aligning with the Argentina expansion. The construction of a 15,000 metric ton hydroxide facility in Zhejiang, China, is set to double LTHM’s production capacity in the country.
The impending merger of Livent and Allkem,expected to be closed on Jan 4, 2024, will result in a top-tier global lithium chemicals producer with pro-forma 2022 combined revenues of about $1.9 billion and adjusted EBITDA of approximately $1.2 billion. Post the merger, the combined entity will be named Arcadium Lithium plc and trade on NYSE with the ticker ALTM. Livent shareholders will own approximately 44% of the new public company.
The stock currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for LTHM’s 2023 sales and EPS implies year-over-year growth of 11.6% and 35%, respectively.
Lithium Americas: This Canada-based lithium miner is yet to generate revenues from operations. However, considering its long-term potential, it would be wise to keep an eye on the stock. On Oct 3, 2023, the former Lithium Americas Corp. underwent a reorganization, resulting in the creation of two distinct publicly traded entities—Lithium Americas (Argentina) Corp. (NYSE: LAAC) and Lithium Americas Corp. (NYSE: LAC).
Lithium Americas is strategically banking on its Thacker Pass project in Nevada, a top-tier, generational asset boasting the largest lithium resource in the United States. The project, uniquely positioned with significant exploration potential, is the sole fully permitted venture in the United States with a clear production pathway, making it vital to the domestic supply chain.
With a projected annual yield of 80,000 tons, Thacker Pass is poised to play a pivotal role in achieving substantial domestic lithium production on a large scale in the coming decade. As the largest shareholder of Lithium Americas, General Motors GM is fully aligned and committed to establishing a robust North American-focused supply chain for EV raw materials. The lithium carbonate produced at Thacker Pass will find application in General Motors’ proprietary Ultium battery cells, supporting the eligibility of EVs for consumer incentives under U.S. clean energy tax credits.
Lithium Americas currently carries a Zacks Rank #3.
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