It’s been a rough few months for lithium stocks. Albemarle (NYSE:ALB) slipped from about $250 to $126.16. Lithium Americas (NYSE:LAC) fell from about $22 to $6.52. The Global X Lithium ETF (NYSEARCA:LIT) dropped from $68 to $48.30. Livent Corp. (NYSE:LTHM) dropped from about $29 to $14.32. Piedmont Lithium (NASDAQ:PLL) fell from $62.50 to $27.18. All thanks to oversupply issues, and slower global adoption of electric vehicles.
However, the fear is creating a massive opportunity for patient investors.
Remember, as Morningstar recently noted, we “continue to forecast a price rebound as strong demand growth outpaces supply leading to a supply deficit in 2024. In our view, rising EV adoption and the increasing buildout of energy storage systems will keep lithium demand growing to surpass 1 million metric tons in 2024, from 800,000 in 2022, eventually hitting 2.5 million metric tons by 2030. While we see rising supply, we think enough projects will face delays to keep a market deficit as demand grows,” as we also mentioned here.
Again, I’d use the temporary, excessive fear as an opportunity – especially with these top lithium stocks.
Sprott Lithium Miners ETF (LITP)
One of my favorite ways to trade hot themes is with an exchange traded fund (ETF). Not only do they allow you to diversify with dozens of stocks, they’re also far less expensive.
Look at the Sprott Lithium Miners ETF (NASDAQ:LITP), for example.
With an expense ratio of 0.65%, the ETF has 49 holdings, and trades for just over $11 a share. While its chart is a disaster, that’s to be expected with the latest pullback in lithium stocks. With a good deal of patience, and growing demand for lithium, it will eventually come back strong. Some of its top holdings include Albemarle, Livent Corp., Lithium Americas, American Lithium (NASDAQ:AMLI), and Ganfeng Lithium(OTCMKTS:GNENF) to name a few.
Livent Corp (LTHM)
Livent is ridiculously oversold, as well. Since July, it dropped from a high of about $29 to a current price of $14.32. Again, though, with patience, and sizable lithium demand, it’ll come back strong. It’s one of those stocks you want to buy, forget about, and check back on in about a year. From its current price, I’d like to see it initially retest $19 a share.
We also have to consider the company has a strong customer base, holding long-term contacts with companies such as Tesla (NASDAQ:TSLA), BMW (OTCMKTS:BMWYY), and Panasonic (OTCMKTS: PCRFY). That, and the company is expanding into Argentina to work on its 200,000 metric ton lithium carbonate project.
American Lithium (AMLI)
There’s also American Lithium, which dropped from a high of about $3.80 to $1.17 this year. Don’t write this one off either. While its chart is disastrous, it is showing signs of life. Helping, the company just submitted an environmental impact assessment study for its Falchani lithium project in Peru, and hopes to have approval in months.
And, as noted by Seeking Alpha, American Lithium CEO Simon Clarke cited “support of the new authorities in Peru in helping us fast-track this process… we will now be able to complete our PFS and move rapidly into the mine permitting process.”
Even better, AMLI just raised its estimates for the project by 476%. It now believes this project could hold 5.53 million metric tons of lithium, which “would make it one of the world’s largest hard-rock lithium projects.” Down but now out, AMLI is an interesting idea to consider.
On the date of publication, Ian Cooper did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
