We need as much lithium as possible when it comes to all things green. There’s just one tiny problem. We don’t have enough supply to meet all of the demand. That’s why investing in lithium stocks has become a no-brainer. Even lithium producers around the world are becoming nervous that they may not be able to meet the most aggressive electrification timelines, creating a big opportunity for lithium stocks.
Plus, according to Reuters, “There were 45 lithium mines operating in the world last year, with 11 expected to open this year and seven next year, according to Fastmarkets. That pace is far below what consultants say is needed to ensure adequate global supply. Even if more lithium mines are built, there are not enough facilities to produce specialized types of metal for batteries. Automakers may be forced to accept lower-quality lithium, which decreases an EV battery’s range.”
No wonder auto companies like General Motors (NYSE:GM) and Ford Motor (NYSE:F) are securing lithium supply agreements directly with miners like Albemarle (NYSE:ALB) and Lithium Americas (NYSE:LAC). After all, to meet all of the electric vehicle demand alone, Sprott ETFs say demand could increase more than 40 times, as compared to what we saw in 2020.
That being said, you may want to seriously consider these seven lithium stocks if you’re not already in them. I expect them all to double, if not triple, the short-term, with patience. Longer-term, unless we can get our hands on far more lithium supply, these seven stocks below could turn $5,000 into $1 million over the long term.
Lithium Americas (LAC)
Every time I write about lithium, I talk about Lithium Americas because it holds the most potential on this list. Not only does it operate in the Thacker Pass mine, it received a $650 million investment from General Motors to move things along at the mine. In addition, the company just announced it produced its first lower-than-battery-quality lithium carbonate.
Plus, as you know, it’s splitting into two companies to create more value. Lithium Argentina will own its Argentinian assets, including the interest in Caucharí-Olaroz, the Pastos Grandes project, and the interest in the Sal de la Puna project. Lithium Americas will control Thacker Pass.
Standard Lithium (SLI)
Standard Lithium (NYSE:SLI) just said it found the “highest grade brine” in Arkansas. Plus, Exxon Mobil (NYSE:XOM) just bought drilling rights to 120,000 gross acres in the Smackover Formation in southern Arkansas, near where Standard Lithium already operates.
Also, according to The Wall Street Journal, Exxon just announced plans to build one of the world’s largest lithium processing facilities in Arkansas, with a capacity to produce 75,000 to 100,000 metric tons a year of lithium, added Seeking Alpha. That could also be interesting for Standard Lithium.
Plus, consider this. According to Standard Lithium CEO Robert Mintak, “the Smackover could become as significant to domestic lithium production as the Permian Basin of West Texas and New Mexico has been for U.S. oil output,” as also noted by The Wall Street Journal. “The economics will be better, though. And the resource will last longer. There’s a more favorable environment for where the product is going [compared with oil].”
American Lithium (AMLI)
American Lithium (NASDAQ:AMLI) is one of the cheapest lithium stocks on the market. It has two lithium projects at the moment. One is the TLC Lithium project in Nevada, which reportedly holds about 4.2 million tonnes of lithium carbonate equivalent.
The company also acquired lithium exploration properties in Nevada, including Fish Lake Valley and Big Smoky Valley projects, which according to Seeking Alpha, have shown high-grade lithium brine results. There’s also the Falchani Lithium project in Peru, where the company says assay results show high-grade lithium.
It also just invested in Surge Battery Metals, which, according to AMLI CEO Simon Clarke, will “enable the continued exploration and development of the Nevada North Lithium Project, a claystone project which we believe is highly prospective with the potential to be a large-scale, high-grade deposit.”
Clarke also noted the company is seeing good progress on all fronts and is delivering on key milestones. Not only did it file its Preliminary Economic Assessment (PEA) for its Nevada project, but it is also making good progress with its Falchani Lithium Project in Peru.
Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) is another hot lithium idea to consider. At the moment, it’s trying to advance its mine in North Carolina, “which could become one of North America’s biggest sources of lithium for EV batteries,” as I also noted on June 26. Once completed, the company expects this project to produce about 30,000 metric tonnes of lithium hydroxide annually. It also has a goal of commencing construction in 2024.
In Tennessee, the company has plans for a lithium hydroxide production facility, which is expected to also produce about 30,000 metric tonnes of lithium hydroxide annually. That, according to the company, is “double the amount of lithium hydroxide currently being produced in the United States.”
Livent (LTHM)
There’s also Livent (NYSE:LTHM) will combine with Allkem in an all-stock $10.6 billion deal. In fact, as I noted on July 18. “the tie-up between these two will create the third-largest lithium producer in the world, and should benefit from tight supply and strong demand.”
Analysts like that deal, too, with KeyBanc upgrading the LTHM stock to overweight from sector weight with a $30 price target. B. Riley also upgraded the stock to a buy, with a $32 target. Bank of America also maintained its buy rating with a new price target of $29 from $27. Plus, LTHM has had impressive earnings, with revenues up 77% year over year.
Its GAAP net income improved by 116% year over year. Adjusted EBITDA jumped 195% year over year. GAAP EPS was up 96% year over year, as adjusted EPS improved by 186%.
Sigma Lithium (SGML)
Or, take a look at Sigma Lithium (NASDAQ:SGML), which just transitioned from being a developer to a producer after achieving its first production of green lithium. It now has plans for full production capacity this month. It also just loaded its first trucks for its shipment of green lithium and tailings from its Grota do Cirilo project in Brazil.
Even better, as noted on the company’s site, “Grota do Cirilo is a “Tier-1” project that is among the largest and highest-grade hard rock lithium deposits in the world, with excellent metallurgy and low impurities. Sigma Lithium is expected to be a top 5 lithium producer globally upon achieving full-scale commercial production.”
Phase 1 of the project is expected to produce 270,000 tonnes of high-purity lithium concentrate. Phase 2 is expected to double its production rate to 531,000 tonnes. Moving forward, the property may hold another seven deposits beyond Phases 1 and 2.
Sprott Lithium Miners ETF (LITP)
Or, if you just want to diversify with several lithium stocks at less cost, there’s always the Sprott Lithium Miners ETF (NASDAQ:LITP), a pure-play ETF focused on lithium mining companies. While the ETF already ran from about $15 to $19 since March, I still believe it could double, if not triple, with patience.
With an expense ratio of 0.65%, this is a pure-play ETF holding lithium mining companies. Some of its top holdings include Sociedad Quimica (NYSE:SQM), Pilbara Minerals (OTCMKTS:PILBF), Albemarle, Livent, Lithium Americas, and Piedmont Lithium, to name a few.
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.
