I expect that these lithium stocks will remain solid investments as the world’s transition to electric vehicles has only just begun. Most Wall Street analysts also remain bullish on the long-term potential of these companies as most have robust balance sheets and pay big dividends to investors. So here are seven of the best lithium stocks to buy.
Albemarle (ALB)
Albemarle (NYSE:ALB) is a leading producer of lithium globally. ALB bulls cite its 41.03% five-year return and growing dividend as some of the key reasons to stay invested in the stock.
This could be an exceptional year for ALB despite softening demand for lithium as China experiences headwinds. The company plans to adjust its capital expenditures to between $1.6 billion and $1.8 billion, down from approximately $2.1 billion in 2023.
Specific initiatives include commissioning the Meishan lithium conversion facility and targeting an annual reduction of approximately $95 million in costs. This is expected to increase its free cash flow, as it spent $1.91 billion in CAPEX for the last twelve months.
Wall Street is bullish on ALB this year as analysts have predicted that its share will rise by 65.84% within the next twelve months, making it one of the best lithium stocks to buy now.
Sociedad QuÃmica y Minera de Chile (SQM)
Sociedad QuÃmica y Minera de Chile (NYSE:SQM) is a major lithium producer with extensive reserves in the Atacama Desert in northern Chile.
Last year was eventful for SQM stock, as the company entered into a long-term lithium agreement with LG Energy Solution and announced a lithium supply agreement with Ford (NYSE:F).
The company also issued U750 million of senior unsecured “Green Bonds,” which could increase its liquidity and financial position considerably.
What I like about SQM is that it pays a substantial dividend, with a dividend yield of 4.88%. It has a very low payout ratio of just 14.51%, which suggests it could substantially lift its dividend without harming its cash position.
Like with the other lithium stocks to buy in this article, Wall Street is bullish on SQM, too, as it has a rating of “Buy” and a projected upside of 73.72% for its stock price.
Arcadium Lithium (ALTM)
Arcadium Lithium (NYSE:ALTM) is a newly formed entity resulting from the $10.6 billion merger of former companies Allkem and Livent.
Reuters described the result of the merger as creating the “world’s third-largest producer of the metal used to make electric vehicle batteries.”
Experts cited the merger as capable of leveraging each entity’s unique strengths and reducing costs through a vertically integrated business model. The company reported $1.2 billion in revenue for FY2023, which included $441.71 million in net income.
The brand could see substantial growth in FY2025. Analysts expect that its top line will grow 39.51% to $2.33 billion, while its EPS will surge by an impressive 106.73% to 66 cents.
It should be noted, however, that ALTM’s EPS is expected to decrease by 63.21% in FY2024 before this EPS surge will happen. One can chalk up this decrease to a mix of softening demand for lithium as well as working out the kinks of the merger.
Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) is focused on developing lithium resources in the United States. It has a geographically important location in North Carolina and has agreements in place with EV makers such as Tesla (NASDAQ:TSLA).
Despite a challenging market environment marked by a significant decline in spot lithium prices last year, PLL stock reported revenues of $47.13 million last quarter and had a positive EPS of $1.19.
Looking ahead, PLL is focusing on advancing its projects across North Carolina, Quebec, and Ghana to help it reach cash flow-positive status. The company’s FCF has been negative for the past twelve months, burning through $47.82 million.
Part of its focus for 2024 will be its efforts in securing a significant quantity of potential spodumene concentrate production, which is essential for producing lithium hydroxide.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) is developing lithium projects in Argentina and Nevada.
LAC focused on its Thacker Pass project in northern Nevada last year, which is poised to play a crucial role in bolstering North America’s lithium supply chain.
Once operational, the project is expected to contribute around $2 billion annually to the economy.
The company also has some potential government backing, as it has engaged with the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program to potentially cover up to 75% of the capital costs for Thacker Pass.
LAC stock is currently pre-revenue and pre-earnings, but it does have $200.50 million of cash and cash equivalent on its balance sheet, which could give it some much-needed stability.
Ganfeng Lithium (GNENF)
As one of China’s largest lithium compounds producers, Ganfeng Lithium (OTCMKTS:GNENF) has a diversified portfolio in lithium mining and refining.
Despite the challenges facing lithium businesses in China, there are some positive developments on the horizon for GNENF stock.
For example, the company announced an increase in its stake in Mali Lithium, which is expected to be highly accretive for the company.
This is part of a broader move for Chinese companies to source their raw materials internally, and it could raise the ratio of self-sourced lithium raw materials to 70% in the long run for the business.
GNENF stock is also exploring a spinoff for LiEnergy. This spinoff is intended to support the business development of Ganfeng LiEnergy and improve the operations of its battery business.
Standard Lithium (SLI)
Standard Lithium (NYSE:SLI) is engaged in lithium brine properties in the United States. Its flagship project is the Lanxess Project in southern Arkansas.
The company made some substantial progress last year. The company announced the completion of a Definitive Feasibility Study for its Phase 1A project and a Preliminary Feasibility Study for its South West Arkansas project. Both of these initiatives could boost its overall production output.
Like other lithium stocks, SLI is currently pre-revenue and has no earnings. But this hasn’t stopped Wall Street from issuing bullish forecasts for its potential. It currently has a rating of “Strong Buy,” and there is an enormous 547.48% predicted upside for its stock price.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.