With demand for electric vehicles (EVs) decreasing, the original expectation and excitement around the lithium industry have somewhat lessened. Yet, that does not mean that the extraction of elemental lithium is an unworthy economic pursuit. Rather, both the price of lithium and the value of the companies extracting it have seen a price correction. This correction has resulted in a series of lithium stocks to buy on the dip before the next lithium-centered technology hits the market.
What is the reason for this? No matter whether it’s in an electric vehicle or smartphone, lithium is still the best element for making rechargeable batteries. Bearing this in mind, the current push toward even greater technological integration and renewable energy has kept the necessity of lithium extraction relevant.
As a result, investors willing to hold onto lithium stocks for the long run could see their fortunes grow as lithium deposits become more scarce and the price of the resource increases.
Arcadium Lithium (ALTM)
Perhaps one of the most well-rounded companies in the lithium market, Arcadium Lithium (NYSE:ALTM) has a deep history despite its relatively new branding. A combination of lithium giants Allkem and Livent, which trace their roots back to the mid-20th century, ALTM has a broad range of applications to draw from for market performance.
More specifically, the company functions as a vertically integrated lithium producer and provider, meaning it both extracts and processes the chemical for its end users. Furthermore, the company is a specialized producer of lithium hydroxide, which is a critical component in the production of greases, dyes, resins, flexible adhesives and other pharmaceutical applications.
Currently, the company is trading around a 54% discount from its initial public offering price of around $7 back in January. However, it’s important to remember this company is the product of a merger and will need time to stabilize financial performance and revenue costs. Once it does, it is likely to be a dominant force and one of the best lithium stocks to buy on the dip in the sector thanks to its diversification and product pipeline.
Lithium Americas (LAC)
While automakers may now be questioning the shift towards EV models, Lithium Americas’ (NYSE:LAC) access to North America’s lithium boom could still make it a long-term winner. That’s because the company has early rights to develop the Thacker Pass, in Nevada. Considering the stance the U.S. has taken towards Chinese EV automakers, a company with a foothold in domestic production could be a lucrative play.
While the U.S. and its top EV makers still rely substantially on Chinese-processed lithium, there’s ample chance that an economic cold war between the two countries could impact lithium imports in the future.
LAC stock has taken a decent plunge since earlier this spring when it was first recommended, but now, could be an even better buying opportunity as the firm continues to develop one of America’s prime lithium deposits. Should the company play its cards right, it could be America’s premier source of lithium for the foreseeable future.
Li-Cycle (LICY)
Despite mixed analyst ratings, Li-Cycle (NYSE:LICY)has the potential to transform the current lithium industry in the long run. The company’s current primary advantage is its two-step recycling process which it claims has a 95% recovery rate for returning critical materials back into the supply chain. Its processes also result in minimal solid and liquid waste with zero combustion and zero wastewater discharge. The best part about this process is it can be applied to any kind of lithium-ion cell, from the smallest commercial batteries to EV batteries.
Moreover, the company’s two major expansion projects, one in Rochester, NY, and another in Portovesme, Italy are currently under review, pending approval for continued construction. Should Li-Cycle secure approval, its value could rise based on the increased recycling capacity.
Thus, investors should keep a close eye on this highly specialized company before it becomes a cornerstone of a future energy economy that relies on lithium-ion batteries for transportation.
On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
