Investing in the best lithium stocks to buy can prove to be incredibly lucrative. The electric vehicles sector, in particular, is expected to be a focal point in driving long-term growth in the space. And, according to a McKinsey report, the demand for lithium carbonate equivalent (LCE) is expected to grow by 500% to 700% from 2021 to 2030.
In addition to the EV realm, lithium has significant applications across other industries. However, over the years, demand has shifted substantially from ceramics, glasses, metallurgical powders, and other industrial use cases to batteries. Lithium batteries now account for roughly 95% of lithium demand. The numbers mentioned above are impressive, especially considering the impact of emerging battery technologies such as quantum glass over the next few years. Hence, some of the top lithium stocks to buy will remain excellent bets over the long term.
| GNENF | Ganfeng Lithium | $6.26 |
| ALB | Albemarle | $214.87 |
| LTHM | Livent | $20.21 |
| LIT | Global X Lithium & Battery ETF | $60.61 |
| LAC | Lithium Americas | $20.53 |
| AMLI | American Lithium | $2.31 |
| SQM | Sociedad Química y Minera de Chile | $81.71 |
Ganfeng Lithium (GNENF)
One of the top lithium stocks to buy is Ganfeng Lithium (OTCMKTS:GNENF), the crème de la crème in the lithium market. It’s China’s largest lithium metal producer with plans to boost capacity by the end of the current decade, significantly. The goal is to produce a whopping 600,000 tonnes of LCE annually, boosting capacity by triple-digit margins from 2021 levels.
The Chinese lithium producer is at the epicenter of the EV supply chain covering refining, processing, battery manufacturing, and other key areas. Consequently, it has benefitted immensely from this diversity, with its top and bottom lines growing by triple-digit margins year-over-year. EBITDA growth is at over 501% with the robustness in Lithium prices, which should continue to improve at a staggering pace for the foreseeable future.
Albemarle (ALB)
Albemarle (NYSE:ALB) is a specialty chemicals giant worldwide with a growing lithium division. This is evidenced by the five-fold increase in lithium sales last year to a mind-boggling $2.6 billion. Moreover, it closed out in 2022 with a record conversion capacity of 200 kilotonnes per annum (KTPA), expecting a 175% increase in conversion capacity by 2027.
ALB operates an A-graded business, which has witnessed a massive increase on both lines in the past year. Revenue and EBITDA growth have exceeded sector medians and historical averages by a wide margin and then some last year. Consequently, its operating cash flow growth is up by an eye-watering 454% for the year. As we advance, it expects revenue growth from 55% to 75%. Given its growth trajectory, analysts at Tipranks expect a 43% upside for ALB stock from current price levels.
Livent (LTHM)
Livent (NYSE:LTHM) is a pure-play lithium producer that has been one of the most profitable businesses in the segment. It operates three main mining locations: Bessemer City, North Carolina; Felix, Argentina; and a mine in Zhangjiagang, China. These plants effectively produce 5,000 tons of lithium hydroxide annually, with its Chinese mine producing 15,000 metric tons upon completion.
Furthermore, it entered a joint venture with Canadian Nemaska Lithium, a 50% owner. It expects Nemaska to produce revenues as early as the first half of 2025. In fact, the mining capacity expansions from Livent are all expected to be complete within a couple of years. Moreover, the firm’s cost advantage, evidenced by its 40%+ EBITDA margins, will continue to fund its expansion plans.
Global X Lithium & Battery Tech ETF (LIT)
Global X Lithium & Battery Tech ETF (NYSEARCA:LIT) is a leading exchange-traded fund (ETF) that offers a low-risk alternative to investing in the complete lithium cycle. With an expense ratio of less than 1%, the LIT ETF has holdings in some of the biggest names in the lithium and battery sectors. Many of the names discussed in the article are part of the ETF and other big names, including Tesla (NASDAQ:TSLA), TDK Corp. (OTCMKTS:TTDKY), Piedmont Lithium (NASDAQ:PLL), and others.
Over the years, LIT stock has been an excellent wealth compounder offering over 223% returns in the past three years. Moreover, its Bid/Ask % Spread of 0.12% is 23% lower than the sector median, indicating higher liquidity with lower trading costs.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) is currently one of the hottest EV investments boasting high-quality long-term lithium mining assets in the U.S. and Argentinian regions. Its most popular mining asset is the Thacker Pass project which was recently given the go-ahead after an arduous legal battle. The mine has a 40-year life with a net present value of almost $5 billion and a yearly EBITDA visibility of $1.18 billion.
Construction has already started on the mine with a cash balance of $392 billion, LAC is unlikely to run into any liquidity issues. Most recently, it received a handsome $650 million in cash from General Motors (NYSE:GM). Also, you have the Argentinian Cauchari-Olaroz asset, which also boasts a 40-year life and an EBITDA visibility of a colossal $308 million. Based on these epic assets, Tiprank’s analysts’ rate LAC stock as a Strong Buy, which is 70% undervalued.
American Lithium (AMLI)
Shifting gears, let’s move onto a speculative bet in the lithium space with moon-shot potential; American Lithium (NASDAQ:AMLI). AMLI has the potential to become one of the largest lithium producers. It has two main projects: the Tonopa in Nevada and Falchani in Peru. Both of these projects are one of a kind and could potentially generate millions in sales for the business.
Tonopah is an advanced-stage lithium project that could potentially operate at world-beating costs based on a new study conducted by Echelon Capital Markets. AMLI recently received $13 billion in funds to advance the project. Falchani in Peru is the sixth-largest lithium deposit in the world, potentially becoming another game-changing asset for the company.
Sociedad Quimica y Minera (SQM)
Sociedad Quimica y Minera (NYSE:SQM) is a Chilean lithium miner which almost always makes the list of the best lithium stocks buy. Much has to do with its impeccable track record, marked by its stellar double-digit margins. Its competitive advantage lies in its cost advantage due to its Chilean assets. Chile has one of the largest and highest-grade lithium assets globally, with conducive environmental conditions to lower the need for energy-intensive extraction methods.
Like its peers, last year was bombastic for the company, generating a net income of $3.9 billion, over a 560% increase from 2021. Total sales shot up to $10.7 billion from $2.9 billion in the prior-year period. As we advance, SQM sets aside a massive $3.4 billion to boost production capacity. The expectation is for demand to reach approximately 1.5 million LCE by 2025.
On the date of publication, Muslim Farooque did not have (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.