Get Rich Quick with These 3 Lithium Stocks to Buy Now
With oversupply issues and falling demand for electric vehicles, lithium stocks were crushed. But you may want to use the downfall as an opportunity to accumulate lithium stocks to buy on the cheap.
For one, “After its decline, the lithium carbonate spot price is now at a level that threatens some higher-cost projects under development and higher-cost low-grade lithium supply from China. Going forward, we believe a higher lithium price may be needed to incentivize needed supply. And weak current prices may continue to fuel M&A,” says ETFTrends.com.
Two, if the Federal Reserve does cut rates, as expected this year, we could see a resurgence of electric vehicle sales, and green energy demand. All of which will require lithium.
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With crisis becoming an opportunity, consider these top lithium stocks to buy today.
Albemarle (ALB)
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Heading into earnings on Feb. 15, shares of Albemarle (NYSE:ALB) jumped more than $4.30 to $120.09 earlier this week. All in hopes the company has some positive news to share following news it’s reducing costs by $95 million a year, with cuts to its workforce.
Helping, RBC Capital has a buy rating on ALB with a price target of $140. Better, while we wait for ALB to recover, we can collect its current yield of 1.33%. We also have to consider most of the negativity has been priced into the stock. With ALB, I’d like to see it rally back to $150. Long-term, ALB is one of the standout lithium stocks to buy.
Sociedad Quimica y Minera (SQM)
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Yielding 12.03%, Sociedad Quimica y Minera (NYSE:SQM) is showing signs of life, too. Earlier this week, for example, SQM jumped about $1.51 a share after finding support around $40. Last trading at $41.75, it now trades at 1.24x sales, which is lower than its five-year average of 4.54. It’s also trading just less than 4x earnings at the moment.
And while recent earnings weren’t so hot, that was to be expected with lithium prices in the dumps. In its most recent quarter, SQM revenues fell 38% year-over-year to $1.84 billion. Net income was 56% lower at $479.9 million, as EPS crumbled 56% to $1.68 year- over-year.
However, it does appear that a good deal of negativity is priced in here, too. Crisis has become an opportunity here, too. With patience, I’d like to see SQM rally back to $50 initially.
Sprott Lithium Miners ETF (LITP)
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Or, you can put money into an exchange-traded fund if you want to diversify at a low cost. Look at the Sprott Lithium Miners ETF (NASDAQ:LITP), for example. It’s also starting to show signs of life. After finding support at around $8.50, the ETF is now up to $9.23. From here, as lithium attempts to find a bottom, I’d like to see the LITP retest $11 initially.
With an expense ratio of 0.65%, the ETF has 49 holdings, and trades for just under $10 a share. With a of patience, and growing demand for lithium, it will eventually come back strong.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
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