Always take advantage of excessive fear in the markets. Look at lithium stocks, for example.
Many of the top lithium names were trampled by oversupply issues, and concerns about electric vehicle demand. But you want to use that fear to your advantage, just as Warren Buffet, Sir John Templeton and Baron Rothschild would tell you.
Sir John Templeton, for example, taught us to buy excessive pessimism. Warren Buffett says that a “climate of fear is your friend when investing; a euphoric world is your enemy.” Even Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.”
Eventually, lithium prices will push higher again. That’s because, as I noted on Jan. 21, “With some lithium mines shutting down or reducing production we could see less supply. This could help stabilize prices and send lithium prices higher with demand.” If you’ve got the stomach for it, and patience, here are some of the top lithium stocks to start buying now.
Albemarle (ALB)
I’ve mentioned Albemarle (NYSE:ALB) about a dozen times over the last several months.
And I’ll probably continue to do so because a good amount of fear has been priced into it and other hot lithium stocks. In fact, with cuts to its demand forecast, falling lithium prices and plummeting electric vehicle sales now priced in, the stock is ridiculously oversold. And, as other investors run scared from ALB on all that news, it’s time to buy the blood in the streets.
With a lot of patience, ALB will pay off. After all, according to ALB CEO Kent Masters, lithium prices are unsustainable and must rise to supply long-term investments, as noted by Seeking Alpha. Unless global leaders are going to give up on their green energy dreams, we’ll need all the lithium we can get.
Arcadium Lithium (ALTM)
Considered to be one of the biggest lithium companies in the world, Arcadium Lithium (NYSE:ALTM) is cheap. In fact, at just $4.65 a share, it’s only trading at 6.6x earnings, and with a price to earnings growth (PEG) ratio of just 0.35. Still, ALTM is showing some signs of life, with RSI, MACD, and Williams’ %R starting to pivot higher.
In addition, according to President and CEO Paul Graves, “It is clear that very few lithium expansion projects make economic sense at current market prices, and the longer prices stay near these levels the greater the impact will be on future supply shortfalls. As we saw in 2022, this will increase the likelihood of a rapid increase in future lithium prices…”
Again that reinforces the idea that with “some lithium mines shutting down or reducing production we could see less supply. This could help stabilize prices and send lithium prices higher with demand.”
Global X Lithium ETF (LIT)
Or, as I usually point out, we can diversify at a low cost with an oversold exchange-traded fund, like the Global X Lithium ETF (NYSEARCA:LIT). Over the last few days, the LIT ETF bounced from support at $39.26 to about $42.76. From here, I’d eventually like to see the ETF rest $52, with patience. With an expense ratio of 0.75%, the ETF invests in the complete lithium cycle. That includes mining and refining the metal through battery production.
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.
