Lithium stocks to watch have been devastated.
But with a good deal of “excessive pessimism” now priced in, it’s time to buy.
For one, we’re seeing an uptick in global electric vehicle sales. Two, with mines shutting down or being delayed, supply will begin to dry up. Arcadium Lithium (NYSE:ALTM), for example, just said it would suspend or delay two of its projects with the current lithium glut and price slump.
However, as we saw in 2022, lithium prices will explode again as supply is cut.
Plus, “The world’s largest lithium producers told a major industry conference they remain bullish on long-term demand for the electric vehicle battery metal despite the recent price plunge that has forced layoffs and curtailed expansions,” as noted by Reuters.
Even Exxon Mobil (NYSE:XOM) just said the world urgently needs significantly more lithium than it’s producing, as noted by Bloomberg. That being said, investors may want to seriously consider buying beaten-down lithium stocks on the cheap.
Albemarle (ALB)
Look at Albemarle (NYSE:ALB), for example.
Excessively oversold at $81.60, the lithium giant is also over-extended on RSI, MACD and Williams’ %R. Plus, it’s now sitting at an unsustainable low it hasn’t seen since October 2020.
While analysts, including Piper Sandler, Scotiabank, RBC Capital and Bank of America, are still downgrading ALB on lithium price concerns, it’s all overdone. Also, while we wait on the eventual recovery here, we can at least collect its yield of about 2%.
Earnings haven’t been stellar, but we really didn’t expect them to be. In its most recent quarter, its earnings per share of four cents missed by 42 cents. However, revenue of $1.43 billion did beat by $100 million. All of which should improve as lithium prices improve.
Right now, I’d just buy the excessive pessimism with ALB and let it ride.
Sociedad Quimica Y Minera (SQM)
Oversold and starting to pivot higher, Sociedad Quimica Y Minera (NYSE:SQM) is also a buy on weakness. It’s also starting to pivot from over-extensions on RSI, MACD and Williams’ %R. From its last traded price of $36.09, I’d like to see it retest $43, near term. Better, while we wait for SQM to push higher, we can collect its current yield of 5.81%.
Just as we saw with ALB, analysts are piling on with price downgrades. But again, a good deal of weakness has been priced into the stock.
Also, just as we saw with ALB, earnings haven’t been so hot. But that’s really to be expected until we start to see lithium prices break higher. In its first quarter, its EPS loss of $3.04 missed by $1.46. Revenue, down 52.2% year-over-year, also missed by $60 million.
Sigma Lithium (SGML)
Another one of the most oversold lithium stocks to buy is Sigma Lithium (NASDAQ:SGML).
At the moment, the Canadian-based company produces lithium at its Grota do Cirilo Project in Brazil. It also has a 100% ownership stake in properties in the South American country, including Grota do Cirilo, Sao Jose, Santa Clara and Genipapo.
SGML also just announced it will double production of its Quintuple Zero Green Lithium – which is produced at its Greentech lithium plant using 100% renewable energy.
Also, trading at just $9.33, it’s also oversold on RSI, MACD and Williams’ %R. Helping, analysts at Bank of America recently raised their price target on the stock to $29 with a buy rating.
We’ll also get a better idea of what’s happening at SGML when it posts earnings on August 15 after the market close.
Atlas Lithium (ATLX)
There’s also Atlas Lithium (NASDAQ:ATLX), which is developing hard rock lithium project in Brazil’s well-known Lithium Valley in Minas Gerais. The company already said it’s making substantial progress toward producing lithium by the fourth quarter.
In addition, according to the company, it now has “the largest lithium exploration footprint in Brazil, totaling 53,942 hectares. To put it into perspective, such an area is greater than nine times that of Manhattan Island in New York.”
ATLX is also oversold at $9.25 and is over-extended on RSI, MACD and Williams’ %R, as well. The last time it was this beaten down was in early 2023 before it ran from about $7.50 to a high of nearly $45. While I don’t expect it to retest that high immediate term, I do believe it could retest $17.50 near term from here.
Pilbara Minerals (PILBF)
Pilbara Minerals (OTCMKTS:PILBF) is just as oversold.
And not to sound like a broken record, it’s also over-extended on RSI, MACD and Williams’ %R. Plus, from its last traded price of $1.95, I’d like to see an initial retest of $2.80 near term.
With earnings, the company’s revenue jumped 58% quarter-over-quarter to $305 million. Its sales volume was also up 43%. It also ended its most recent quarter with $1.6 billion in cash. Helping, the company is also looking to double its production capacity for lithium spudomene at its Pilgangoora mine in Western Australia.
As noted by Seeking Alpha, “More spodumene from the company’s flagship mine could result in a decade of production averaging 1.9M metric tons/year pending a final investment decision on the project, following a feasibility study expected to be completed in late 2025, MiningWeekly.com reports.”
With PILBF, buy the weakness. Patience over the long haul should pay off.
iShares Lithium Miners and Producers ETF (ILIT)
Or, if you want to diversify with top lithium names, there’s the iShares Lithium Miners and Producers ETF (NASDAQ:ILIT). The ETF invests in 44 lithium miners and producers with an expense ratio of 0.47%. That includes Arcadium Lithium, Pilbara Minerals, Albemarle, Lithium Americas (NYSE:LAC), and Sigma Lithium.
ILIT is also technically oversold at an all-time low. It’s also over-extended on RSI, MACD and Williams’ %R and is overdue to bounce. From its last traded price of $9.37, I’d like to see it retest $13 initially.
Global X Lithium ETF (LIT)
Just as oversold is the Global X Lithium ETF (NYSEARCA:LIT).
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.
Some of its 40 holdings include Albemarle, Pilbara Minerals, Tesla (NASDAQ:TSLA), BYD Co. (OTCMKTS:BYDDF), Arcadium Lithium, and Panasonic.
We also have to consider that should we see a stronger green energy boom and a global recovery in electric vehicle sales, the LIT ETF will recover along with lithium prices. At the moment, it’s also technically oversold on RSI, MACD and Williams’ %R.
It also just caught support dating back to September 2020. It’s definitely worth buying and holding for the long haul.
On the date of publication, Ian Cooper did not have (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
