If data centers are powering AI’s future, mined lithium will power the EV and tech sectors, which rely on mobility. Over a 5-year period, lithium prices have reached their lowest level since August 2021. For the year, lithium price went down 66.77% amid subdued EV demand, leaving behind undervalued lithium stocks.
BMI’s research predicts that by 2025, global lithium supply will surpass demand. China, a top lithium processor, will see demand grow 20.4% annually until 2032, against just a 6% increase in supply.
The global lithium market size should grow from $38.2 billion in 2022 to $230.4 billion by 2031. This places its compound annual growth rate (CAGR) at 22.1%, according to Straits Research. In that time frame, investors could see 6x growth.
Year-to-date, the Global X Lithium & Battery Tech ETF (LIT) returned negative 11.56% returns, suggesting plenty of unexplored lithium exposure. Keeping long-term trends in mind, these undervalued lithium stocks should be on investors’ watchlists.
Atlas Lithium (ATLX)
Atlas Lithium (NASDAQ:ATLX) focuses its operations on Brazil’s Minas Gerais. However, it holds rights to mine other critical minerals, ranging from nickel and titanium to graphite. Nasdaq listed ATLX on Feb. 24, 2023, as the company quickly acquired necessary funding.
Atlas remains fully funded for 2024 production, courtesy of Goldman Sachs (NYSE:GS) as financial advisor. After exploratory phases, the first production is Q4 2024 at a 150,000 tpa target for spodumene concentrate mining as a high-purity lithium ore.
Atlas Lithium covers 240 km2 across Minas Gerais and holds 54 mineral rights. It also operates next to Sigma Lithium Corporation on some sites. By mid-2025, the company should double its production to 300,000 tpa (tonnes per annum), with an additional target production of 150 ktpa.
Based on four analyst inputs pulled by Nasdaq, the average ATLX price target is $45.5 vs. the current $14.81. The high estimate is $52 vs the low forecast of $39 per share.
Sigma Lithium Corporation (SGML)
Also in Brazil, Sigma Lithium’s (NASDAQ:SGML) main site is at the cutting-edge Greentech plant at Grota do Cirilo. Sigma runs the world’s 4th largest operations for pre-chemical lithium. Like Atlas, the company enjoys the low cost of doing business in Brazil.
As of March, Sigma ramped production up to 240-270 ktpa annually. The company is scheduled to double its 2024 capacity by 250,000. This is courtesy of favorable subsidized development worth $100 million with long duration and low rates. By the end of 2026, Sigma plans to operate at 1,020 kt capacity, following the conclusion of phase 4 expansion.
The company forecasts lithium concentrate reaching $1.575/t at a market capitalization of $4.5 billion from the present $2.16 billion. For FY24, Sigma delivered $324 million in revenue and $36.2 million in net income in Q3.
Based on five Nasdaq analyst inputs, the average SGML price is $32.55 vs the current $14.57. The high estimate is $38 vs the low forecast of $27 per share, nearly double the present price level.
American Lithium (AMLI)
Based in Canada, American Lithium (NASDAQ:AMLI) has a TLC claystone lithium deposit close to the Tesla (NASDAQ:TSLA) gigafactory in Nevada. Both companies are natively sourced. This is a favorable position for USG eliminated green credits for EV companies sourcing raw battery materials in adversarial countries like China.
AMLI runs mining sites in Nevada and Peru for undeveloped lithium and uranium. However, the new government will likely fast-track its Falchani lithium project, although the company is already drilling across 420 platforms in southern Peru.
Given the rise of nuclear power demand in the EU, AMLI stock could double in the future for uranium exposure. In June 2023, the company moved its Macusani uranium project to become publicly traded International Uranium Corp., which regulatory bodies have not yet approved.
In November’s Q3 FY24 earnings, American Lithium reported a net loss of CAD$32.9 million for the nine-month period. This was a 29% loss increase from the year prior. Against total assets worth CAD$23.5 million, the company has $4.4 million in total liabilities, leaving CAD$13 million in cash and cash equivalents.
As a penny stock, AMLI has the highest growth potential among undervalued lithium stocks. Based on three analyst inputs pulled by Nasdaq, the average AMLI price target is $4.61 vs. the current $0.74. The high estimate is $5.5 vs the low forecast of $3.7 per share.
On the date of publication, Shane Neagle did not hold (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.
