Lithium stocks are currently presenting a golden opportunity for patient investors. Despite recent supply issues that have negatively impacted the sector, the fear surrounding these stocks is creating a massive opportunity. The pullback is seen as excessive and temporary, as supply issues are expected to be resolved in the future.
As per Morningstar, the demand for lithium is set to surpass 1 million metric tons in 2024, up from 800,000 in 2022, and is projected to reach 2.5 million metric tons by 2030. This is largely due to the rising adoption of electric vehicles and the increasing buildout of energy storage systems. While supply is also expected to rise, it is believed that enough projects will face delays to maintain a market deficit as demand grows.
The world’s largest lithium producers remain bullish on the sector. According to Reuters, these producers view the market volatility as short-term and expect the electrification trend to continue growing.
One of the lithium stocks to consider is Albemarle (NYSE:ALB), which had plunged to a low of $123.38 on Nov. 29. However, it has since bounced back to about $128 and could refill its bearish gap around $170. Bank of America (NYSE:BAC) recently upgraded ALB to a Neutral rating, noting the stock is undervalued. As ALB recovers, investors can collect its 1.2% yield.
Livent (NYSE:LTHM) is another stock to watch. Despite recent downgrades from JPMorgan (NYSE:JPM) and Piper Sandler, the stock is seen as a good buy due to the temporary nature of the lithium price pullback. LTHM currently trades at 20% growth.
American Lithium (NASDAQ:AMLI) is also worth considering. The company recently submitted an environmental impact assessment study for its Falchani lithium project in Peru, which could provide a massive upside catalyst. AMLI has raised its estimates for the Falchani project by 476% from 2019, stating it could hold 5.53M metric tons of lithium carbonate equivalent, making it one of the world’s largest hard-rock lithium projects.
In conclusion, despite the current market volatility, lithium stocks present a significant opportunity for investors willing to weather the storm.
Let us know what you think, please share your thoughts in the comments below.