In this article, we discuss 11 best lithium stocks to buy now. If you want to skip our detailed discussion on the lithium industry, click 5 Best Lithium Stocks To Buy Now.
Previously, we reported that the global lithium market is projected to grow significantly from $7 billion in 2022 to $22.6 billion by 2030, with a compound annual growth rate (CAGR) of 15.7%. The demand for clean energy technologies, driven by the transition towards clean energy, is a key factor in this growth. The International Energy Agency’s Sustainable Development Scenario expects a substantial increase in the demand for minerals, including lithium, with a rise of nearly 90%. Electric vehicles and battery storage systems are the largest consumers of lithium. While there may be an excess supply of lithium raw material in the near future, there could be a potential shortage of lithium afterwards. When considering long-term climate objectives, the expected supply from current mines and construction projects will only meet around half of the projected demand for lithium by 2030. Moreover, the global demand for lithium-ion batteries used in electric vehicles has increased, and Chile’s lithium resources have become valuable. However, Chile has lost market share to Australia and faces competition from Argentina. The demand for lithium is expected to dramatically increase from 500,000 metric tons in 2021 to 3-4 million metric tons by 2030.
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According to market participants in conversation with S&P Global Commodity Insights, lithium prices are expected to receive significant support in 2023 due to the strong demand driven by the increasing use of electric vehicles worldwide. However, there may be a slight price correction due to a slowdown in the Chinese market. John Walker, the CEO of Tees Valley Lithium (TVL), a subsidiary of Alkemy Capital Investments, commented that prices are expected to stay stable at their current levels for the next few years. Francis Wedin, Vulcan Energy Resources CEO and Managing Director, told S&P Global:
“While some normalization of current high spot prices is possible, on the contract side, we believe that the market will remain tight in 2023, with insufficient supply coming on stream.”
As per the forecast by S&P Global Market Intelligence’s Metals and Mining Research, the supply of lithium chemical is forecasted to increase to 858,000 metric tons of lithium carbonate equivalent (LCE) in 2023, compared to the previous forecast of 668,000 metric tons in 2022. The demand for LCE is expected to reach 856,000 metric tons in 2023, up from 684,000 metric tons in 2022. As a result, the market is projected to have a minor surplus of 2,000 metric tons in 2023, an improvement from the deficit of 15,000 metric tons in 2022. According to the November 2022 report by S&P Global Market Intelligence, it is predicted that the average price of lithium carbonate will drop by 10% in 2023 compared to last year, reaching $45,833 per metric ton. This price decline is attributed to the rising supply of lithium. Senior Analyst Alice Yu commented that even with a price above $40,000 per metric ton, the forecasted price is still three to five times above the prices observed from 2019 to 2021.
Also read: 10 Undervalued Lithium Stocks to Buy Now
Despite the small surplus in 2023, Dale Ferguson, the CEO of Savannah Resources, expressed his belief that the lithium market would continue to be “extremely tight” until 2024. He added:
“However, while the market may be more ‘balanced’ than the extreme scenario that appears to have existed in 2022, there is still risk for a meaningful deficit in our opinion given the challenges associated with either expanded existing supply projects, or commissioning and ramping up production at new projects.”
Along the same lines, Vulcan Energy Resources CEO and Managing Director Francis Wedin told S&P Global:
“Even assuming that all newly planned lithium projects come on stream with no delays, we still see a supply-demand gap, given the stated targets of OEMs and battery manufacturers, driven by government targets and customer demand for EVs.”
Looking ahead, market participants maintain an optimistic outlook, noting the supply limitations and the significant demand for lithium. To benefit from the growth potential in this industry, some of the best lithium stocks to buy include Tesla, Inc. (NASDAQ:TSLA), Rio Tinto Group (NYSE:RIO), and Albemarle Corporation (NYSE:ALB).
Our Methodology
We selected the following lithium stocks based on the hedge fund sentiment toward each stock. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
Photo by Kumpan Electric on Unsplash
Best Lithium Stocks To Buy Now
11. Li-Cycle Holdings Corp. (NYSE:LICY)
Number of Hedge Fund Holders: 12
Li-Cycle Holdings Corp. (NYSE:LICY) is a Canadian company focused on lithium-ion battery resource recovery and recycling. It specializes in extracting valuable materials from used batteries, including lithium, nickel, cobalt, graphite, copper, and aluminum. Additionally, Li-Cycle Holdings Corp. (NYSE:LICY) offers products derived from these materials, such as lithium carbonate, cobalt sulphate, nickel sulphate, and manganese carbonate.
Li-Cycle Holdings Corp. (NYSE:LICY) and Glencore International AG announced on May 9 that they have joined forces to establish a hub facility in Portovesme, Italy. The main objective of Portovesme Hub is to produce crucial battery materials such as nickel, cobalt, and lithium using recycled battery materials.
According to Insider Monkey’s first quarter database, 12 hedge funds were bullish on Li-Cycle Holdings Corp. (NYSE:LICY), compared to 14 funds in the prior quarter. Zilvinas Mecelis’ Covalis Capital is the largest stakeholder of the company, with 12.4 million shares worth $70.2 million.
In addition to Tesla, Inc. (NASDAQ:TSLA), Rio Tinto Group (NYSE:RIO), and Albemarle Corporation (NYSE:ALB), Li-Cycle Holdings Corp. (NYSE: LICY) is one of the best lithium stocks to watch.
10. Piedmont Lithium Inc. (NASDAQ:PLL)
Number of Hedge Fund Holders: 13
Piedmont Lithium Inc. (NASDAQ:PLL) is a company in the development stage that is involved in exploring and developing resource projects within the United States. It is one of the best lithium stocks to invest in.
On March 30, Piedmont Lithium Inc. (NASDAQ:PLL) and Sayona Mining announced the resumption of commercial spodumene concentrate production at the North American Lithium project in Quebec, which is jointly owned by both companies. The companies disclosed that the $80 million restart of the North American Lithium project was accomplished within the allocated timeframe and budget. Furthermore, this project is projected to be the primary and substantial source of new spodumene production in North America for the next two years.
According to Insider Monkey’s first quarter database, 13 hedge funds were long Piedmont Lithium Inc. (NASDAQ:PLL), compared to 11 funds in the prior quarter.
9. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 14
Lithium Americas Corp. (NYSE:LAC) is a resource company that operates in the United States and Argentina. Its main focus is on exploring and discovering lithium deposits. Lithium Americas Corp. (NYSE:LAC) is one of the best lithium stocks to watch. On June 13, Lithium Americas Corp. (NYSE:LAC) achieved a significant milestone by producing its initial batch of lithium carbonate at the Cauchari-Olaroz project in Argentina. However, during the initial ramp-up phase towards the project’s full production capacity of 40,000 metric tons per year of battery-grade lithium carbonate equivalent, the company anticipates operating below the intended capacity. In order to meet the growing demand, Lithium Americas Corp. (NYSE:LAC) plans to increase its capacity by an additional 20,000 tons per year of lithium carbonate equivalent by the end of 2025.
According to Insider Monkey’s first quarter database, 14 hedge funds were bullish on Lithium Americas Corp. (NYSE:LAC), with combined stakes worth $47.7 million. Steve Cohen’s Point72 Asset Management is a prominent stakeholder of the company, with 680,153 shares worth $14 million.
Massif Capital made the following comment about Lithium Americas Corp. (NYSE:LAC) in its Q1 2023 investor letter:
“During the first quarter, Lithium Americas Corp. (NYSE:LAC) had several positive events, including a favorable record of decision ruling for Thacker Pass, paving the way for construction of the mine to start, a revised Thacker resource/cost estimates, and GM’s financing/offtake agreement. Even though LAC is non-producing and its stock is down 34% over the past year (compared to the larger lithium producer’s 3%), the stock remains one of our favorites with multiple catalysts (and still up roughly 600% from our initial purchase price):
- Cauchari-Olaroz Stage I first production in sight and Stage II initiation by year-end,
- Substantial earthworks beginning 2H23 at Thacker,
- Growth potential with greater guidance on Pastos Grandes, and
- Formal separation of North American Assets and Argentine assets into separate publicly traded entities
As Cauchari-Olaroz in Argentina and Thacker Pass come online, volumes will effectively be marked at leading-edge pricing. As such, it seems prudent to continue underwriting growth, especially given the firm’s experienced management team with a visible pipeline to incremental supply before 2025. These qualities make one or both post-separation entities attractive buyout targets for numerous suitors…” (Please click here to read the full text)
8. Sigma Lithium Corporation (NASDAQ:SGML)
Number of Hedge Fund Holders: 15
Sigma Lithium Corporation (NASDAQ:SGML) is a company focused on exploring and developing lithium deposits in Brazil. The company’s primary goal is to serve the global electric vehicle industry by providing lithium, a key component in electric vehicle batteries. Sigma Lithium Corporation (NASDAQ:SGML) is one of the best lithium stocks to watch.
On April 20, Sigma Lithium Corporation (NASDAQ:SGML) CEO Ana Cabral-Gardner announced plans for the company’s inaugural lithium shipment from Brazil. The materials will be sent to a processor affiliated with South Korea’s LG Energy Solution. The CEO revealed that 300,000 metric tons of ultrafine tailings from the initial operational phase will be transformed into a pre-chemical input for widely-used car batteries. Furthermore, Sigma Lithium Corporation (NASDAQ:SGML) outlined a second and third phase of expansion, which is expected to increase capacity to approximately 766,000 tons by mid-2024. The company commenced production at the Grota do Cirilo lithium mine earlier in April 2023, with all of its current output allocated for export purposes.
According to Insider Monkey’s first quarter database, 15 hedge funds were long Sigma Lithium Corporation (NASDAQ:SGML), compared to 11 funds in the last quarter. Vince Maddi and Shawn Brennan’s SIR Capital Management is a prominent stakeholder of the company, with 485,846 shares worth $18.2 million.
7. QuantumScape Corporation (NYSE:QS)
Number of Hedge Fund Holders: 15
QuantumScape Corporation (NYSE:QS), a company in the development stage, is dedicated to bringing to market solid-state lithium-metal batteries designed for electric vehicles and other applications. It is one of the best lithium stocks to monitor.
On April 26, QuantumScape Corporation (NYSE:QS) provided updates in its Q1 earnings report, stating that the testing of 24-layer A0 prototype cells at one of its automotive customers has been successfully concluded. The final results align with the information previously communicated in the company’s shareholder letter. QuantumScape has now set a target for its initial commercial product to be a 24-layer cell with a capacity of around 5 amp-hours. As of the end of the first quarter of 2023, QuantumScape Corporation (NYSE:QS) had a liquidity position of slightly over $1 billion. Looking ahead to full year 2023, the company anticipates capital expenditures between $100 million and $150 million, as well as cash operating expenses ranging from $225 million to $275 million.
According to Insider Monkey’s first quarter database, 15 hedge funds were bullish on QuantumScape Corporation (NYSE:QS), compared to 21 funds in the prior quarter. Philippe Laffont’s Coatue Management is the biggest stakeholder of the company, with 1.4 million shares worth $11.5 million.
Baron Opportunity Fund mentioned QuantumScape Corporation (NYSE:QS) in its Q4 2020 investor letter. Here is what the fund said:
“QuantumScape Corporation is developing solid-state battery technology for electric vehicles designed to improve key aspects of the battery, including safety, charging times, energy density, and cost. We believe the company’s existing material development and manufacturing techniques can help overcome solid state technological and commercialization hurdles. During the quarter, we participated in the merger between QuantumScape and SPAC Kensington Capital. Shares have since appreciated, driven by investor excitement for the growth opportunities the company may capture with its innovative battery technology.”
6. FREYR Battery (NYSE:FREY)
Number of Hedge Fund Holders: 20
FREYR Battery (NYSE:FREY) is involved in the manufacturing and distribution of battery cells for a wide range of applications, including energy storage systems, electric mobility, marine, and aviation sectors. The company specializes in designing and producing facilities for lithium-ion battery cell production.
On June 29, Morgan Stanley analyst Adam Jonas upgraded FREYR Battery (NYSE:FREY) to Overweight from Equal Weight, assigning a price target of $13 on the shares. The analyst acknowledged that there are still potential challenges in executing its plans, but he expressed confidence in the company achieving important funding milestones and making significant advancements in commercial objectives in the near future.
According to Insider Monkey’s first quarter database, 20 hedge funds held stakes worth $176 million in FREYR Battery (NYSE:FREY), compared to 27 funds in the prior quarter worth $288.5 million.
Like Tesla, Inc. (NASDAQ:TSLA), Rio Tinto Group (NYSE:RIO), and Albemarle Corporation (NYSE:ALB), FREYR Battery (NYSE:FREY) is one of the best lithium stocks to invest in.
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Disclosure: None. 11 Best Lithium Stocks To Buy Now is originally published on Insider Monkey.
