In this article, we discuss the 10 cheap lithium stocks to buy now. If you want to read about some more lithium stocks available at bargain prices, go directly to 5 Cheap Lithium Stocks to Buy Now.
Lithium is one of the hottest sectors of the market as demand far outstrips supply. As electric vehicle (EV) adoption increases, the lithium market is expected to strengthen even further in 2022. Data from S&P Global indicates that prices for seaborne lithium carbonate climbed more than 400% in 2021. S&P Global Market Intelligence estimates that lithium chemical supply is forecast to reach 636,000 mt lithium carbonate equivalent in 2022. In 2020 and 2021, this figure stood at around 408,000 mt and 497,000 mt, respectively.
As lithium becomes a sought-after commodity, the fight over control of the resource is also growing. A spokesperson of Chinese mining firm Tianqi Lithium told S&P Global Platts that it was becoming more difficult to obtain and control lithium resources as the “strategic significance” of the material grew. Global EV sales are also increasing and therefore lifting the lithium industry. Platts Analytics estimates that light-duty EV sales will rise to 10.5 million units by 2025, up from 6 million units in 2021.
Amid this boom, several lithium firms are seeking to boost capacity to meet surging demand. Lithium demand will climb over 30% by 2025, per conservative estimates. Investors seeking to profit from this activity should consider the best lithium stocks in the EV space. Some of the top stocks in the EV sector presently include Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Freeport-McMoRan Inc. (NYSE:FCX).
Our Methodology
The companies that are trading at relatively cheap prices compared to their growth potential were selected for the list. The real-time share prices of the stocks, as of April 18, are mentioned alongside other details for further clarity.
In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks were also considered. Hedge fund sentiment was included as a classifier as well.
The hedge fund sentiment around each stock was calculated using the data of around 900 elite hedge funds tracked by Insider Monkey.
Photo by Kumpan Electric on Unsplash
Cheap Lithium Stocks to Buy Now
10. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Number of Hedge Fund Holders: 24
Real-Time Share Price as of April 18: $82.60
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) markets lithium and related products. The firm posted earnings for the fourth quarter of 2021 on March 1, reporting earnings per share of $1.13, beating estimates by $0.21. The revenue over the period was over $1 billion, topping expectations by $109 million. The gross margin for the fourth quarter was $542 million. The company estimated that the demand growth would touch 30% in 2022. The total demand for lithium is also expected to climb to 1 million tons sooner than expected.
On April 12, Deutsche Bank analyst Corinne Blanchard maintained a Buy rating on Sociedad Química y Minera de Chile S.A. (NYSE:SQM) stock with a price target of $98, placing a “Catalyst Call Buy” on the firm. The analyst noted that the earnings power of the firm was underestimated by the market.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Sociedad Química y Minera de Chile S.A. (NYSE:SQM) with 1.7 million shares worth more than $89 million.
Just like Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Freeport-McMoRan Inc. (NYSE:FCX), Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is one of the stocks that lithium investors have their eyes on.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Sociedad Química y Minera de Chile S.A. (NYSE:SQM) was one of them. Here is what the fund said:
“Among materials names in our structural bucket, we sold Sociedad Química y Minera de Chile S.A. (NYSE:SQM) as the stock hit our price target. Lithium prices remain at levels well below previous highs and while we expect they may reach higher levels in the future; high pricing likely encourages additional supply onto the market.”
9. Piedmont Lithium Inc. (NASDAQ:PLL)
Number of Hedge Fund Holders: 9
Real-Time Share Price as of April 18: $73.11
Piedmont Lithium Inc. (NASDAQ:PLL) is a North Carolina-based resource firm. In early February, the firm announced that it planned to double lithium hydroxide production in the US to 60,000 tons per year in 2022. Half of this would come from the flagship project in Carolina and half from a second plant. The stock has climbed after the White House announced that it would be invoking the Defense Production Act to boost domestic production of materials needed to manufacture electric vehicle batteries.
On March 24, JPMorgan analyst Tyler Langton maintained an Overweight rating on Piedmont Lithium Inc. (NASDAQ:PLL) stock and raised the price target to $92 from $84, noting that the firm was a low-cost lithium producer in North America and attractive within the EV supply chain.
At the end of the fourth quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $12 million in Piedmont Lithium Inc. (NASDAQ:PLL), compared to 6 in the preceding quarter worth $16 million.
8. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 19
Real-Time Share Price as of April 18: $29.69
Lithium Americas Corp. (NYSE:LAC) is a Canada-based resource firm. In late February, the company announced that it was exploring the possible separation of business in the United States and Argentina. The firm said it would create a standalone company to look after the development of the Thacker Pass lithium project in Nevada. The firm also approached the US government for funding through the Advanced Technologies Vehicle Manufacturing Loan Program for development of the Nevada project.
On April 5, Deutsche Bank analyst Corinne Blanchard maintained a Buy rating on Lithium Americas Corp. (NYSE:LAC) stock and raised the price target to $40 from $34, noting that lithium producers seemed well-positioned given improvements to contract pricing.
Among the hedge funds being tracked by Insider Monkey, Singapore-based investment firm Himension Capital is a leading shareholder in Lithium Americas Corp. (NYSE:LAC) with 2.3 million shares worth more than $68 million.
In its Q1 2021 investor letter, Massif Capital, an asset management firm, highlighted a few stocks and Lithium Americas Corp. (NYSE:LAC) was one of them. Here is what the fund said:
“Lithium Americas: The volatility noted above in Lithium Americas Corp. (NYSE:LAC) has resulted in solid returns via our options trades around our core equity position. At the current time, we are short calls on LAC, as we have done multiple times throughout the position’s life, expiring on May 21, 2021, at a $17.5 and $22.5 strike price. The volume of contracts sold at each strike corresponds to the size of the equity position we want should the calls expire in the money, and the underlying equity gets called away from us. The thought process behind this trade construction is that if we know the size of the position we want at a particular price point, there is no reason not to accumulate additional returns by pre-selling the stock we would have sold anyway.
High levels of volatility positively impact the price of options, increasing the premium we can earn from selling covered calls. To date, we have sold covered calls on Lithium Americas Corp. (NYSE:LAC) that have expired worthless four times, yielding a roughly 7% return on the equity position’s current value or 71bps for the portfolio overall. The outstanding covered calls appear to be trending towards a similar worthless expiration. If they do, the covered call trades on Lithium Americas Corp. (NYSE:LAC) will result in us owning the shares with committed capital of -$0.28 per share.
Although we believe in the..” (Click here to see full text)
7. Livent Corporation (NYSE:LTHM)
Number of Hedge Fund Holders: 28
Real-Time Share Price as of April 18: $25.02
Livent Corporation (NYSE: LTHM) markets lithium compounds. The stock has gained in the past few weeks after the firm posted a 50% year-on-year increase in revenue in the fourth quarter of 2021. The company has also previously announced that it would soon begin engineering work on a second capacity expansion program in Argentina that would add 20,000 metric tons of lithium carbonate capacity by 2025. The total lithium carbonate operations of the firm in the country would climb to 60,000 tons a year as a result.
On February 23, Mizuho analyst Christopher Parkinson kept a Neutral rating on Livent Corporation (NYSE: LTHM) stock with a price target of $26, noting that market conditions were turning in favor of the firm after a challenging two years.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Joho Capital is a leading shareholder in Livent Corporation (NYSE:LTHM) with 4.2 million shares worth more than $104 million.
6. QuantumScape Corporation (NYSE:QS)
Number of Hedge Fund Holders: 26
Real-Time Share Price as of April 18: $18.21
QuantumScape Corporation (NYSE:QS) engages in the development and commercialization of solid-state lithium-metal batteries. The stock has gained since late March after reports indicated that the company had signed a deal with German carmaker Volkswagen to integrate solid state batteries into their Porsche electric vehicles. The Porsche brand expects its sales mix of EVs to hit 50% within the next three years. The German carmaker is considering an initial public offering for Porsche as well.
On March 28, SMBC Nikko analyst Srini Pajjuri maintained a Neutral rating on QuantumScape Corporation (NYSE:QS) stock with a price target of $20, noting that the solid state batteries the firm was developing had the potential to revolutionize the EV industry. However, the analyst cautioned that the execution risk with the firm was high.
At the end of the fourth quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $157 million in QuantumScape Corporation (NYSE:QS), compared to 25 in the preceding quarter worth $197 million.
In addition to Tesla, Inc. (NASDAQ:TSLA), Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), and Freeport-McMoRan Inc. (NYSE:FCX), QuantumScape Corporation (NYSE:QS) is one of the stocks that elite investors are monitoring in the EV space.
In its Q1 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and QuantumScape Corporation (NYSE:QS) was one of them. Here is what the fund said:
“QuantumScape Corporation (NYSE:QS) is an early-stage developer of solid-state battery technology for electric vehicles aimed at improving key aspects of batteries, including safety, charging times, energy density, and cost. The company went public via a SPAC in November. After rapid appreciation, the stock came under pressure when the company raised additional capital to help accelerate its commercialization process. We exited our small position, as described below.
We sold QuantumScape Corporation (NYSE:QS), an early-stage solid-state electric vehicle battery innovator, because it was an undersized position with an ambitious valuation. We will continue to monitor QuantumScape’s developments and may revisit the company as an investment at a future point in time.”
Click to continue reading and see 5 Cheap Lithium Stocks to Buy Now.
Suggested Articles:
- 10 Best Roth IRA Stocks to Buy According to Reddit
- 10 Best Dividend Stocks for Roth IRA
- 10 Best Money Saving Tips According to Experts
Disclosure. None. 10 Cheap Lithium Stocks to Buy Now is originally published on Insider Monkey.
