Lithium stocks have taken a beating thanks to over-supply. But don’t let that chase you away. Instead, use the recent weakness as an opportunity to buy more. Experts still do not believe the world will have enough supply to meet demand.
Even analysts over at Morningstar believe lithium supplies will need to rise from about 800,000 metric tons in 2022 to about 2.5 million by 2030 to meet demand. So, investors are poised to take full advantage of the weakness in lithium stocks.
Albemarle (ALB)
Recently, Reuters said “Albemarle (NYSE:ALB), the world’s largest lithium producer, is growing rapidly across the Americas, Asia and Australia. Still, it expects global lithium demand to exceed supply by 500,000 metric tons in 2030. Various consultancies and other producers have slightly different projections, but all warn of a looming shortage.”
Every time I mention lithium, I include the industry’s 800 lb. gorilla, Albemarle. Just last week, I mentioned ALB hasn’t been this cheap since late 2020. Also, It’s been trading at six times forward earnings, and less than half of growth. From there, it got even cheaper. But again, the weakness can be seen as an opportunity. Plus, while investors wait for ALB to recover, they can collect its yield of 1.31% in the meantime.
Additionally, as the company recently lowered its sales guidance from a range of 40% to 55% growth, it still expects to grow 30% to 35% this year.
Amplify Lithium & Battery Technology ETF (BATT)
Or, you can always go the route of exchange-traded funds (ETFs) to diversify with lithium names and wait.
With an expense ratio of 0.59%, the Amplify Lithium & Battery Technology ETF (NYSEARCA:BATT) provides exposure to global companies that develop, produce, and use lithium battery technology. All for the low, low price of just $10.27, which is ridiculously oversold.
Some of its top holdings include Tesla (NASDAQ:TSLA), Albemarle (NYSE:ALB), Sociedad Quimica (NYSE:SQM), and Panasonic (OTCMKTS:PCRFY).
Livent Corp. (LTHM)
Livent Corp. (NYSE:LTHM) is showing some signs of life as it holds support at $13.75. Also, it’s wildly over-extended on relative strength (RSI), MACD, and Williams’ %R. Finally, according to the company, is still expects to see “significantly improved performance versus 2022.”
“What also provides further support for the buy case is the fact that the smart money has certainly not bailed on this story. If anything, over the last six months, they have actually boosted their total net shares owned in LTHM by 2%,” as noted by Seeking Alpha contributor The Alpha Sieve.
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.
