Top 6 Lithium Stocks and ETFs for Investment in 2024
Competition between lithium, cobalt, and nickel intensifies for dominance in the global electric vehicle battery sector, with a potential climax anticipated in the second quarter of 2024.
As prices of these metals decline, there's been a corresponding downturn in lithium stocks. Despite being favored by electric vehicle manufacturers for battery production, recent weakening in EV demand has led to this setback.
Goldman Sachs, in a recent research note, highlights the significant downturn in battery metal prices, with nickel, lithium, and cobalt prices plummeting by 60%, 80%, and 65% respectively from their peak. However, Goldman emphasizes that it's premature to definitively declare an end to these bear markets.
While electric vehicle sales have faced hurdles, BloombergNEF projects a 22% overall growth in the global EV market in 2024. Although there's an anticipated slowdown in EV sales growth for the year, steady increases are forecasted for 2025 and 2026.
The global EV battery market is expected to grow at a compound annual rate of 19% over the next decade, with lithium-ion batteries projected to constitute 63% of the market, according to a report by Fact.MR.
The decline in lithium prices has led to a surge in lithium hydroxide futures trading, indicating market activity amidst the downturn.
What does this mean for lithium stocks moving forward? While falling prices and reduced manufacturing demand typically signal trouble for investable commodities, lithium may be an exception, especially in the long term. Here are five stocks and an ETF to consider for navigating the lithium market until demand rebounds:
1. Albemarle Corp. (ALB): Despite a recent decline, this Charlotte-based company, founded in 1887, remains resilient. Analysts are optimistic, with target prices exceeding its current value. With a history of strong performance and a 1.3% dividend yield, Albemarle presents a robust investment option.
2. Mineral Resources Ltd. (OTC: MALRY): This Australian company offers a solid 1.2% dividend yield and significant partnerships in the lithium mining sector, providing long-term stability despite recent profit declines.
3. Arcadium Lithium PLC (ALTM): Formerly Livent, this pure-play lithium producer shows promise post-merger, with encouraging financials and strategic partnerships in place.
4. Lithium Americas Corp. (LAC): Vancouver-based LAC is experiencing growth potential, particularly with its stake in Thacker Pass, one of the largest lithium resources in the U.S., and partnerships with major players like General Motors.
5. Tesla Inc. (TSLA): Despite recent stock price declines, Tesla remains a dominant force in the EV market, with diversified offerings and substantial cash reserves for future growth.
6. Global X Lithium & Battery Tech ETF (LIT): For a diversified approach, consider investing in this ETF, which holds positions in key industry players and provides exposure to various aspects of the lithium supply chain.
While short-term challenges persist, the long-term outlook for lithium remains promising, making it an attractive investment opportunity despite current market conditions.
