In this article, we will be taking a look at 11 cheap lithium stocks to buy according to analysts. To skip our detailed analysis of the lithium and battery industry, you can go directly to see the 5 Cheap Lithium Stocks To Buy.
Metals, minerals, and other resources have long held an important place in the global economy and, subsequently, in the financial markets. Since these commodities have managed to stay in demand, the companies dealing with their exploration, provision, and processing have also stayed relevant. Lithium is one such metal that has quickly become an important resource to businesses and consumers across the globe because of several reasons. Some might argue the most important reason is the metal's use in rechargeable batteries for mobile phones, laptops, cameras, and perhaps most importantly, electric vehicles (EVs).
Environmental Awareness: A Benefit To The Lithium Industry
With climate change and global warming on the rise, corporations and governments across the globe have implemented green programs and solutions in their operations. The emission of harmful gases from traditional cars has rapidly become an issue of pandemic proportions, leading to rising demand for environmentally friendly alternatives in the form of EVs. As a result, companies operating in this space, such as Tesla, Inc. (NASDAQ:TSLA), Rivian Automotive Inc. (NASDAQ:RIVN), and Albemarle Corporation (NYSE:ALB) have managed to reap the benefits of this demand. However, without lithium batteries, most of these companies would be left in the dust, a fact that makes the importance of this commodity more apparent than ever before.
With rising demand, lithium companies are trying to increase the extraction of the chemical while minimizing the adverse environmental impacts of this process. According to CNBC this June, automakers have been setting ambitious EV targets that they have been struggling to meet. As such, lithium companies like Lilac Solutions have set about trying to resolve their issues. Dave Snydacker, the founder and CEO of Lilac Solutions, made the following comment on this matter:
"The auto industry requires a 20x increase in lithium supply and there's just no way to achieve that type of growth with conventional technologies."
New Technologies Take The Stage
Because of this, companies in the industry are now using a new technology known as direct lithium extraction, which promises to increase the efficiency of lithium extraction while minimizing negative risks associated with older methods. This method is also projected to increase lithium production from 54,000 metric tons in 2023 to 647,500 metric tons by 2032, according to Benchmark Mineral Intelligence. This amount is forecasted to be worth almost $21.6 billion at that point.
Direct lithium extraction represents a significant growth opportunity for many lithium companies across the globe today, especially with the demand for EVs and lithium batteries being steadily on the rise. Governments like the US government have also been pushing for more EV production under proposals such as those put forth by the US Environmental Protection Agency, which forecasts US automakers to produce 60% more EVs by 2030 and 67% more by 2032 to meet EV production requirements, according to Reuters this April. Considering the above, we have compiled a list of some cheap lithium stocks to buy today, according to analysts. In light of current developments within the industry, these are lithium stocks that could explode in the near future and include lithium penny stocks as well, for investors looking to buy into this investment opportunity at barely any cost.
To select the stocks for our list, we went through the top holdings of the Global X Lithium & Battery Tech ETF. We shortlisted 11 stocks from these holdings based on which stocks had the highest upside potential based on average analyst price targets, using data from TipRanks. We then ranked these stocks based on their upside potential, from the lowest to the highest. We also used Insider Monkey's hedge fund data from the first quarter to show their popularity among hedge funds this year.
Albemarle Corporation (NYSE:ALB) is a specialty chemicals company. It is based in Charlotte, North Carolina. The company operates through its Lithium, Bromine, and Catalysts segments. The Lithium segment provides lithium compounds like lithium carbonate, lithium hydroxide, and lithium chloride, among more.
As of July 18, Michael Sison at Wells Fargo maintains an Overweight rating on shares of Albemarle Corporation (NYSE:ALB). The analyst also raised his price target on the stock from $250 to $270.
There were 41 hedge funds holding stakes in Albemarle Corporation (NYSE:ALB) in the first quarter. Their total stake value in the company was $355 million.
Holding 1,300 shares in the company, Beech Hill Partners was the largest shareholder in Albemarle Corporation (NYSE:ALB) at the end of the first quarter.
Citadel Investment Group held the most shares in Sociedad Quimica y Minera (NYSE:SQM) at the end of the first quarter, amounting to 1.5 million shares.
Santhosh Seshadri, an analyst at HSBC, maintains a Buy rating on shares of Sociedad Quimica y Minera (NYSE:SQM) as of July 6. The analyst also holds a price target of $90.50 on the stock.
Sociedad Quimica y Minera (NYSE:SQM) is a fertilizers and agricultural chemicals company based in Santiago de Chile, Chile. The company's products include specialty plant nutrients, iodine derivatives, lithium derivatives, potassium chloride and sulfate, industrial chemicals, and more.
We saw 20 hedge funds holding stakes in Sociedad Quimica y Minera (NYSE:SQM) in the first quarter, with a total stake value of $310 million.
Like Tesla, Inc. (NASDAQ:TSLA), Rivian Automotive Inc. (NASDAQ:RIVN), and Albemarle Corporation (NYSE:ALB), Sociedad Quimica y Minera (NYSE:SQM) is a lithium stock many hedge funds are piling up on today.
On July 14, Michael Gallo at CL King initiated coverage on shares of EnerSys (NYSE:ENS) with a Buy rating. The analyst also announced a price target of $137 on the stock.
EnerSys (NYSE:ENS) is an electrical components and equipment company. It offers stored energy solutions for industrial applications across the glove. Its products also include lithium batteries which are used in mobile defibrillators, X-ray machines, and more. The company is based in Reading, Pennsylvania.
A total of 23 hedge funds were long EnerSys (NYSE:ENS) at the end of the first quarter. Their total stake value in the company was $329 million.
“EnerSys (NYSE:ENS) is a global leader in stored energy solutions for industrial applications. It supplies motive power batteries for trucks and forklifts, specialty batteries for satellites and military equipment, battery chargers, power converters and distributors, and outdoor equipment enclosures, amongst many other products and systems. Over the past three years, the business faced COVID-19 lockdowns, inflationary cost increases, and restricted access to the critical product components needed for its more complex, higher return products. On its most recent quarterly earnings call, management was confident the business had finally worked past many of these issues and expressed optimism that costs were beginning to level off, supply chain issues were easing, and EnerSys could resume converting its backlog into revenue. The stock price responded favorably to the quarterly results and management’s comments, and we continue to see plenty of opportunity for sequential improvement ahead.”
In the first quarter, 32 hedge funds were long Livent Corporation (NYSE:LTHM). Their total stake value was $162 million.
Livent Corporation (NYSE:LTHM) is another specialty chemicals company on our list. It is based in Philadelphia, Pennsylvania. The company manufactures and sells lithium compounds mainly used in lithium-based batteries, specialty polymers, and chemical synthesis applications across the globe.
An Overweight rating was maintained on shares of Livent Corporation (NYSE:LTHM) by Aleksey Yefremov, an analyst at Keybanc, on July 11. The analyst also raised his firm's price target on the stock from $32 to $35.
Citadel Investment Group was the most prominent shareholder in Livent Corporation (NYSE:LTHM) at the end of the first quarter, holding 91.3 million shares in the company.
Carillon Tower Advisers said the following about Livent Corporation (NYSE:LTHM) in its fourth-quarter 2022 investor letter:
“Livent Corporation (NYSE:LTHM) is a pure-play, fully integrated producer of performance lithium compounds. The stock underperformed amid investor concerns about how a potential decelerating rate of growth in overall electric vehicle (EV) production and demand, primarily in China, would affect the future price of lithium. Despite these potential near-term headwinds, longer-term the global lithium market remains tight, and we believe Livent plays a critical role in the battery value chain and remains well- positioned for the overall continued global adoption of EVs.”
7. BYD Company Limited (OTCMKTS:BYDDF)
Number of Hedge Fund Holders: 2
Upside Potential: 16.92%
Average Analyst Price Target: $40
BYD Company Limited (OTCMKTS:BYDDF) is an automobile manufacturing company based in Shenzhen, China. The company operates through its Secondary Rechargeable Batteries and Photovoltaic, Mobile Phone Components, Assembly and Other Products segments. The first segment manufactures lithium-ion and nickel batteries for sale, among more.
BYD Company Limited (OTCMKTS:BYDDF) was spotted in the portfolios of two hedge funds during the first quarter, with a total stake value of $15.4 million.
Cantor Fitzgerald analyst Andres Sheppard reiterated an Overweight rating on shares of Lucid Group Inc. (NASDAQ:LCID) on July 13. The analyst also maintains a price target of $10 on the stock.
Lucid Group Inc. (NASDAQ:LCID) was seen in the 13F holdings of 16 hedge funds at the end of the first quarter. Their total stake value in the company was $21.7 million.
Lucid Group Inc. (NASDAQ:LCID) is another automobile manufacturer that has made it to our list. The company is based in Newark, California. It supplies electric vehicles (EVs) with lithium-ion batteries, among more.
Like Tesla, Inc. (NASDAQ:TSLA), Rivian Automotive Inc. (NASDAQ:RIVN), and Albemarle Corporation (NYSE:ALB), Lucid Group Inc. (NASDAQ:LCID) is a lithium stock that is highly popular among elite hedge funds this year.
