The rise of electric vehicles and the world’s transition away from fossil fuels has led to the emergence of lithium stocks to buy. These stocks could be millionaire-makers. It’s clear that the energy transition is just getting started. We’re far behind on our climate goals. Furthermore, the issue of global warming has become a focal point for many government policies.
Despite the broader indices trending upwards, with the S&P 500 showing gains over the past five days, the potential of these lithium stocks should not be overlooked. In fact, their current prices may present very attractive entry points for investors with solid investment strategies.
The increasing demand for lithium is driven by the growth in EV production and renewable energy storage. This positions these stocks for significant appreciation. Investors who recognize the long-term value and strategic importance of lithium in the energy transition stand to benefit substantially.
So here are the top lithium stocks to buy that could be nearing ideal buying zones in May.
Sigma Lithium (SGML)
Sigma Lithium (NASDAQ:SGML) is focused on developing its Grota do Cirilo project in Brazil. The company has been making significant progress with its exploration program. The program could lead to a substantial increase in its mineral resource estimates.
In Q1 2024, the company reported revenue of $37.4 million. They also reported an earnings per share (EPS) of -$0.06, exceeding analyst expectations. Sigma Lithium’s Grota do Cirilo project, currently in Phase 1, has an annual production capacity of 270,000 tonnes of lithium concentrate. This is expected to double by 2025 as the company proceeds with Phase 2.
Sigma Lithium’s strategic focus includes ramping up production and expanding its mineral reserves. The reserves increased by 40%, extending the operational life of the Grota do Cirilo project to 25 years. Analysts have a positive outlook on Sigma Lithium. They have a projected stock price target averaging $29.50, suggesting a potential upside of nearly 80%.
Sociedad Quimica y Minera (SQM)
Sociedad Quimica y Minera (NYSE:SQM) is a major player in lithium production, particularly in Chile. The company has rebounded from recent lows and continues to benefit from high demand for lithium.
In Q1 2024, SQM reported a revenue of $7.47 billion. Although, this marked a 30% decline from the previous year due to lower lithium prices. However, the company maintains a strong profit margin. This company continues to benefit from high demand for lithium used in electric vehicles.
Specialized commodities such as lithium are inherently volatile due to their reliance on evolving technologies and fluctuating market demand. However, mean reversion can be a reasonable expectation in this case. This is especially true as the market depends on the health and demand from China’s economy. Moreover, SQM’s robust free cash flow of $1.33 billion and net income of $923 million for the year help to serve as a buffer against these cyclical downswings.
Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) is focused on developing its lithium project in North Carolina, which could become one of the largest sources of lithium in North America.
In Q1 2024, Piedmont reported a revenue of $13.4 million and ended the quarter with $71.4 million in cash. The company achieved record production at its North American Lithium (NAL) operations, with 40,439 dry metric tons of spodumene concentrate produced.
The company plans to double its spodumene shipments in the latter half of the year, targeting an annual production of approximately 126,000 tons. Additionally, Piedmont is implementing a cost-savings plan to reduce operating expenses by $10 million annually and has deferred some 2024 capital expenditures to 2025. The company is also exploring non-dilutive funding options for its Carolina Lithium, Tennessee Lithium, and Ewoyaa projects to minimize equity dilution for investors.
All of these factors point to PLL as being a strong pick for investors seeking seven-figure gains from a sizable investment.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
