10 High-Growth Lithium Stocks to Buy
In this article, we will discuss the 10 high-growth lithium stocks to buy. If you want to see more companies in this selection, go to the 5 High-Growth Lithium Stocks to Buy.
Lithium stocks have been in the limelight in the recent past as they have become a fundamental part of the green revolution. To counter the increasing competition in the lithium industry, the world’s biggest electric vehicle (EV) battery manufacturer, Contemporary Amperex Technology Co., Limited (300750.SZ), popularly known as CATL, decided to modify its pricing strategy to gain more market share. Analysts at leading financial institutions like JPMorgan and Citi Research believe that the company will price its batteries based on the spot market rates of lithium carbonate. The company has decided to fix 50% of the price component at $30,000 per metric (￥200,000). Meanwhile, the remaining 50% of the price component will be linked to the spot market price of lithium carbonate, which is currently hovering around $64,000 per metric ton (￥428,000). Prices have increased nine times in the past three years as the demand for lithium carbonate has surged significantly due to its increased use in EVs. Meanwhile, in the last twelve months, lithium prices have doubled.
Strategies of Major Players in the Lithium Industry
Furthermore, the global uncertainty following the start of the conflict between Ukraine and Russia has resulted in supply chain disruptions globally, which has also resulted in lithium carbonate prices surging higher. The new pricing strategy by CATL reflects a steep discount on battery prices. The China-based company has been able to adopt a penetrative pricing strategy because the company mines its lithium. Similarly, the biggest EV company in the world, Tesla, Inc. (NASDAQ:TSLA), is also planning to build its lithium mining operations. According to Bloomberg, the company could move to acquire Sigma Lithium Corporation (NASDAQ:SGML). Tesla, Inc. (NASDAQ:TSLA) has been considering getting into the lithium mining business for a long time as it is an integral component of its batteries. Back in September 2022, the company led by Elon Musk filed paperwork for a lithium refining facility in Texas. There have been claims in the press that the company held discussions with Glencore Plc, a commodity firm, for a stake in the company. In January 2023, General Motors Company (NYSE:GM) also announced an investment of $650 million in Lithium Americas Corp. (NYSE:LAC).
It must be noted that 57% of the lithium deposit in the world are held in Argentina, Bolivia, and Chile. Furthermore, since the signing of the Inflation Reduction Act (IRA) in the US in August 2022, $13 billion worth of investments have been made in the energy storage segment within the first three months. The demand for lithium is expected to remain strong in 2023 as the reopening of the Chinese economy to its full potential is expected to result in a YoY increase in demand by 30% to 35% in 2023. This will cause the lithium industry to remain in a shortfall as the demand for the metal will be higher than its supply. Some of the high-growth lithium stocks capitalizing on the increasing demand include Allkem Limited (AKE.TO), Pilbara Minerals Limited (PLS.AX), and Tianqi Lithium Corporation (9696.HK).
Photo by Kumpan Electric on Unsplash
Our Methodology
We conducted research to identify companies with strong financial fundamentals, growth potential, and a competitive advantage in the lithium industry. The companies were also assessed based on their exposure to the lithium market, including their production capacity, reserves, and access to key markets. After narrowing down the list of potential companies, we shortlisted the lithium stocks that have posted at least 70% year-over-year (YoY) growth in revenue for the most recent reported quarter. It must be noted that the increase in revenue for these companies was organic and not driven by one-off transactions, reflecting stable growth. The companies have been listed in ascending order of their revenue growth rate.
10 High-Growth Lithium Stocks to Buy
10. Livent Corporation (NYSE:LTHM)
YoY Growth in Revenue for the Most Recent Reported Quarter: 78.5%
Livent Corporation (NYSE:LTHM) is a Philadelphia, Pennsylvania-based fully integrated lithium company.
The company became a publicly listed company following its separation from the chemical manufacturing entity FMC Corporation (NYSE:FMC) in February 2019. The company posted its Q4 2022 results on February 24. Revenue came in at $219.4 million for the quarter and $813.2 million for the whole year. Meanwhile, adjusted EBITDA increased by more than five times YoY to $366.7 million. Livent Corporation (NYSE:LTHM) expects to cross the $1 billion level in the annual top line in 2023 and expects adjusted EBITDA to reach $510 million to $580 million. This would translate into a meaningful improvement in the financial performance of the company.
Carillon Tower Advisers shared its outlook on Livent Corporation (NYSE:LTHM) in its Q4 2022 investor letter. Here’s what the firm said:
“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.”
9. Yongxing Special Materials Technology Co., Ltd (002756.SZ)
YoY Growth in Revenue for the Most Recent Reported Quarter: 120.8%
Yongxing Special Materials Technology Co., Ltd (002756.SZ) is a Huzhou, China-based company that has diversified interests related to nickel alloy and stainless-steel wire rods and bars. The company got involved in the lithium industry in 2017 when it commenced manufacturing cathode and electrolyte materials for lithium-ion batteries.
Yongxing Special Materials Technology Co., Ltd (002756.SZ) announced on February 16 that it will construct a new plant in the Jiangxi province along with its partner Jiangxi Tungsten Holding Group. The facility will focus on the production of battery-grade lithium carbonate as an input for the production of lithium-ion batteries for Contemporary Amperex Technology Co., Limited (300750.SZ). The plant will have an annual capacity of 20,000 tons and will be constructed in two phases.
8. Albemarle Corporation (NYSE:ALB)
YoY Growth in Revenue for the Most Recent Reported Quarter: 193.1%
Albemarle Corporation (NYSE:ALB) is a Charlotte, North Carolina-based leading provider of lithium-ion batteries. The company plans on expanding its production capabilities, and experts believe that the strong cash flow profile of the company will aid it in making investments.
In an update issued to investors on February 21, financial research firm Piper Sandler assigned Albemarle Corporation (NYSE:ALB) stock an Overweight rating and also increased the target price from $310 to $330. The target price reflects a potential upside of over 33.9% from the closing price as of February 28. The Minneapolis, Minnesota-based financial services company said that it would have been concerned if any other entity had been pursuing such an aggressive capital expenditure outlay. However, there isn’t much to be concerned about in the case of Albemarle Corporation (NYSE:ALB) due to its high operational efficiency.
Here’s what Carillon Tower Advisers said about Albemarle Corporation (NYSE:ALB) in its Q4 2022 investor letter:
“Albemarle Corporation (NYSE:ALB) is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. The stock gave back some of its recent gains amid investor concerns about how the future price of lithium could be affected by a potential decelerating rate of growth in overall electric vehicle (EV) production and demand, primarily in China. Despite these potential near-term headwinds, longer-term the global lithium market remains tight, and Albemarle plays a critical role in the battery value chain and remains well-positioned for the overall continued global adoption of EVs.”
7. Sichuan Yahua Industrial Group Co., Ltd. (002497.SZ)
YoY Growth in Revenue for the Most Recent Reported Quarter: 212.2%
Sichuan Yahua Industrial Group Co., Ltd. (002497.SZ) is a Chengdu, Sichuan Province, China-based company that specializes in the production of lithium and related products. The corporation is primarily involved in the production of lithium carbonate, lithium hydroxide, and lithium metal. Sichuan Yahua Industrial Group Co., Ltd.’s (002497.SZ) products are used in a wide range of applications, including batteries for electric vehicles, energy storage systems, and other electronic devices.
In recent years, Sichuan Yahua Industrial Group has become one of the largest lithium producers in China, and the company is rapidly expanding its production capacity to meet the growing demand for lithium worldwide. The company is also actively exploring new opportunities in the lithium industry, including the development of new lithium extraction technologies and the production of high-performance lithium-ion batteries.
6. Contemporary Amperex Technology Co., Limited (300750.SZ)
YoY Growth in Revenue for the Most Recent Reported Quarter: 232.6%
Contemporary Amperex Technology Co., Limited (300750.SZ) is a Ningde, Fujian, China-based lithium company that is one of the biggest makers of lithium-ion batteries for EVs globally. The batteries manufactured by CATL are known for their durability, long life, and fast charging capabilities.
The company uses various chemistries for its batteries, including nickel-cobalt-manganese (NCM), lithium iron phosphate (LFP), and lithium nickel cobalt aluminum oxide (NCA). Contemporary Amperex Technology Co., Limited (300750.SZ) also has partnerships with leading automobile manufacturing giants like BMW, Volkswagen, and Tesla. The company also works with energy storage system providers and has provided batteries for grid-scale storage projects. Contemporary Amperex Technology Co., Limited (300750.SZ) is committed to sustainability and has set a goal of achieving carbon neutrality by 2030. The company is investing in renewable energy, recycling technologies, and other similar initiatives to reduce its environmental impact.
In addition to Contemporary Amperex Technology Co., Limited (300750.SZ), Allkem Limited (AKE.TO), and Pilbara Minerals Limited (PLS.AX), Ganfeng Lithium Group Co., Ltd. (1772.HK) is also on our list of the high-growth lithium stocks to buy.
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Disclosure: None. 10 High-Growth Lithium Stocks to Buy is originally published on Insider Monkey.