As the world makes a concerted effort to champion renewable energy, lithium has emerged as a crucial element in this green revolution. The rise of electric vehicles and advances in battery storage technology continue to drive the demand for this energy metal. Statista anticipates that this demand could escalate to a staggering 3.8 million tons by the year 2035. Further, the International Energy Agency (IEA) projects that the global appetite for lithium might amplify thirteen-fold by 2040, fueled by the growing needs of the electric vehicle market and energy storage sectors.
While demand surges, potential supply shortages loom on the horizon. It is warned that a supply deficit may be imminent as early as next year.
The pressing issues of surging demand coupled with potential supply shortages have the potential to send lithium prices skyrocketing. According to the IEA, recent dips in lithium pricing have discouraged necessary investments to meet the soaring demand “which is set to soar as many nations try to phase out sales of new internal combustion engine cars in the next decade.”
The unfolding scenario provides a significant opportunity for investing in lithium stocks, including Albemarle (NYSE: ALB), Piedmont Lithium (NASDAQ: PLL), and Sigma Lithium (NASDAQ: SGML).
Albemarle (NYSE: ALB) has proven to be resilient, repeatedly bouncing back after facing challenges. Historically, its support level has been around $110, from where it bounced back to $142.50, $132.50, and $137.50 in successive months. Despite not falling to the $110 mark currently, it seems to be prepped for another bounce back, indicating the sentiment of peak pessimism may be over.
Making ALB even more attractive is the recent announcement of a 40-cent quarterly dividend for shareholders of record as of June 14. Despite the drop in lithium prices, ALB has maintained solid earnings, beating estimates by three cents with earnings per share of 26 cents. Given the strength and resilience of the company, ALB is a promising buy at current prices.
Piedmont Lithium (NASDAQ: PLL) presents a compelling buy on weakness. The company is poised for growth with its Caroline Lithium project in North Carolina, which has recently received state approval for construction and operation. The company believes this project could be one of the country’s largest sources of lithium for electric vehicle batteries.
Supporting this outlook, the company said, “Technical studies have demonstrated that Carolina Lithium could be a low-cost producer of spodumene concentrate and lithium hydroxide, benefiting from exceptional infrastructure, minimal transportation distances, low energy costs, a deep local talent pool, and proximity to cathode and battery customers.” With the potential for growth and a buy rating with a $60 price target from D. A. Davidson, PLL could be a strong addition to your investment portfolio.
Sigma Lithium (NASDAQ: SGML) is another lithium stock that is worth the buy on weakness. After peaking at $18.96 from about $11.50, it has now pulled back to $13.53, making it an excellent buy opportunity. The company has made notable strides, including doubling the production of its eco-friendly Quintuple Zero Green Lithium. The product is made at its Greentech lithium plant that boasts of 100% renewable energy, 100% recycled water, and 100% dry-stacked tailings. Furthermore, Sigma has plans to kick off its Phase 2 Industrial Plant by the end of the year, with production expected by 2025.
Given the expected surge in lithium demand and potential supply constraints, ALB, PLL, and SGML stand out as the best lithium stocks to buy this June as the green revolution picks up pace.
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