Investors are seeking out the best lithium stocks as the rise in electric vehicle (EV) adoption fuels demand for lithium. This led to rising prices for the metal in 2022 amid tight supply and rising demand, though lithium is now trading well off its recent highs.
Still, there are plenty of positive catalysts for lithium stocks, including the Inflation Reduction Act (IRA). The bill was signed into law in the summer of 2022, and over the following three months, more than $13 billion worth of investments toward the production of battery raw material and EV manufacturing were announced, according to a Bloomberg News report.
Despite the recent decline, lithium prices remain well above where they were in 2020 and 2021. And many analysts are expecting a big bounce.
"We think long-term end market demand remains strong, and believe that as supply chain destocking ends, tight lithium market conditions will come back, pushing prices higher," says CFRA Research analyst Emily Nasseff Mitsch.
"A bottom seems to have formed in the last couple of weeks, and we expect modest recovery throughout the rest of the quarter, supported by year-end demand," says Deutsche Bank analyst Corinne Blanchard.
Using the TipRanks database, we have compiled a list of the five best lithium stocks, according to analysts. The field for lithium stocks is admittedly small, but each name featured here boasts a Moderate Buy or Strong Buy rating from Wall Street's pros and offers upside potential from current levels based on consensus price targets.
Disclaimer
Data is as of November 1. TipRanks' consensus price targets and ratings are based on analyst opinions issued over the past three months. Stocks are listed in order of consensus rating, lowest to highest, followed by 12-month price targets.
Sociedad Química y Minera de Chile
- Market value: $13.6 billion
- TipRanks consensus price target: $76.38 (63.0% upside potential)
- TipRanks consensus rating: Moderate Buy
Sociedad Química y Minera de Chile (SQM, $46.86) is a chemical company headquartered in Santiago, Chile, that supplies iodine, lithium, industrial chemicals and plant nutrients. The company develops its products from "caliche ore and brines extracted from mineral resources located in northern Chile in the Antofagasta and Tarapacá regions."
When it comes SQM's place on this list of the best lithium stocks, the company expects to produce 180 metric tonnes of lithium carbonate in 2023 and is one of the world's largest lithium producers.
Shares of SQM were up more than 22% for the year-to-date in early February amid investor expectations that the reopening of China could boost the demand for lithium from EV companies. However, shares are now deep in the red amid a decline in lithium prices and elevated interest rates.
"Our fundamental view remains intact on the medium to long-term with a shortage of lithium supply vs demand," says Deutsche Bank's Blanchard. The analyst has a Buy rating on SQM, and maintains " a preference for the most established lithium producers, as we believe they can offer better execution with a lower risk profile, and they are set for growing volumes in key jurisdictions."
Another positive for investors? SQM has one of the highest dividend yields around, currently at 15.8%.
Six of the eight analysts surveyed by TipRanks categorize SQM stock as a Buy. Hear what else the pros have to say about SQM on TipRanks.
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Allkem
- Market value: $3.7 billion
- TipRanks consensus price target: $10.22 (76.2% upside potential)
- TipRanks consensus rating: Strong Buy
Allkem (OROCF, $5.80) is a specialty lithium chemicals company headquartered in Buenos Aires, Argentina. The company's business portfolio includes its Olaroz lithium brine and other borax operations in Argentina; Mt. Cattlin, its hard-rock lithium operation in Australia; and its lithium hydroxide conversion facility in Naraha, Japan.
OROCF has plans to ramp up its lithium production threefold by 2026 and intends to maintain its 10% share of the global lithium market on an international basis over the next 10 years.
In August, the company issued its fiscal year update, which saw its Olaroz lithium facility achieve record production of 16,703 tonnes of lithium carbonate, up 30% year-over-year. Allkem's Olaroz lithium mine generated full-year revenue of $592.2 million. Overall, Allkem recorded total revenues of $1.2 billion in fiscal 2023.
Allkem is expected to merge with fellow lithium stock Livent (LTHM) later this year. The combined company will operate under the name Arcadium Lithium and its shares will trade on the New York Stock Exchange under the ticker "ALTM."
CFRA's Emily Nasseff Mitsch views the "synergies from the proposed merger of LTHM and Allkem positively," saying they "will allow for faster/lower risk growth given increased operating scale/capacity, in our view."
As the demand for lithium continues to ramp up and cause higher prices, analysts maintain their belief that OROCF is one of the best lithium stocks out there. This is evidenced in the consensus Strong Buy rating and $10.22 price target, representing implied upside of 76%. See the full rundown of analyst ratings for OROCF on TipRanks.
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Albemarle
- Market value: $14.4 billion
- TipRanks consensus price target: $236.63 29.06.4% upside potential)
- TipRanks consensus rating: Moderate Buy
Albemarle (ALB, $122.96) is a specialty chemicals company headquartered in Charlotte, North Carolina. ALB has three business divisions, including lithium, bromide specialties and refining catalysts.
Earlier this year, the specialty chemical company announced a new subsidiary for its refining catalysts business called Ketjen. ALB plans to operate this business separately, and Ketjen will have three divisions: Fluidized Catalytic Cracking (FCC); Clean Fuels and Hydroprocessing Catalysts (HPC); and Performance Catalyst & Curative Solutions (PCS).
In early November, the company announced disappointing third-quarter financial results . Adjusted earnings per share fell to $2.74 from $7.50 in Q3 2022. Revenue was up 10.5% year-over- year to $2.3 billion.
In fiscal 2023, the company is targeting adjusted earnings in the range of $21.50 to $23.50 per share, below expectations of $26.05 per share, while net sales are anticipated to be between $9.5 billion and $9.8 billion – a roughly 32% increase at the midpoint over 2022.
Albemarle's long-term growth outlook remains robust, as it has forecasted its net sales to grow at a compounded annual growth rate between 20% and 30% over the next five years.
Out of 18 analysts covering ALB in the past three months, 13 say it's a Buy. Check out Wall Street's average, highest and lowest price targets for ALB on TipRanks.
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Lithium Americas
- Market value: $1.1 billion
- TipRanks consensus price target: $11.30 (71.2% upside potential)
- TipRanks consensus rating: Strong Buy
Lithium Americas (LAC, $6.60) is a mining company that is progressing its lithium projects in Argentina and the U.S. toward production. Like so many of its fellow lithium stocks, LAC has struggled on the charts in 2023, down 13.5% for the year-to-date.
Earlier this year, the company announced the acquisition of Arena Minerals in an all-stock deal valued at $227 million based on the December 19, 2022, closing price.
"The significant synergies between our two projects and better understanding of the basin will enable us to advance development planning and maximize our growth pipeline in Argentina," said Jonathan Evans, president and CEO of Lithium Americas, about the acquisition. "The timing of the Transaction aligns with the Company's previously announced plan to separate into two public companies in 2023, with significant project development activities expected at both businesses early next year."
That separation, which occurred in October 2023, created two separate companies from LAC's North American and Argentine business units. One will be Lithium Argentina (LAAC), an Argentina-focused lithium company that will own Lithium Americas' current interest in its Argentine lithium assets, including the near-production Caucharí-Olaroz lithium brine project.
The other is Lithium Americas, a North America-focused lithium firm that will own the Thacker Pass lithium project in Humboldt County, Nevada, as well as LAC's other North American investments.
Three of the four analysts covering LAC in the past three months are bullish on the stock. Check out Wall Street's average, highest and lowest price targets for LAC on TipRanks.
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Sigma Lithium
- Market value: $2.8 billion
- TipRanks consensus price target: $44.27 (73.0% upside potential)
- TipRanks consensus rating: Strong Buy
Sigma Lithium (SGML, $25.59) is a Canadian company with its operations located in Brazil. It has four mineral properties, including Grota do Cirilo, Sao Jose, Santa Clara and Genipapo.
Earlier this year, the company announced the commissioning of the Dense Medium Separation module of its Greentech production plant and commercial production of battery grade lithium concentrate began April of this year.
The company also made some management changes recently, with Caio Araujo tapped as the new chief financial officer in August, while Brian Talbot left his role as chief operating officer in late September.
Late last year, the company unveiled plans to triple its production to 100,000 metric tons of lithium carbonate annually by 2024. This followed a study at its Grota do Cirilo project in Brazil and the commissioning of this mine. Production began at Grota do Cirilo in April 2023.
Shares of SGML are down 9% so far in 2023, but BMO Capital analyst Joel Jackson believes that the stock "will close the valuation gaps with larger spodumene producers and is a willing seller of its assets sooner than later." However, the analyst warns that he is assuming "some higher operational expenditures as shipments have become reality and management is better refining cost estimates."
The analyst has an Outperform (Buy) rating with a price target of $48 on the stock, implying an upside potential of 87.6% at current levels. Check out other analysts' price targets and analysis for SGML at TipRanks.
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