In this article, we discuss the 10 best lithium stocks to buy now along with the latest updates and outlook of the global lithium and battery market.
Despite challenges like pricing and demand headwinds in 2023, the U.S. and Canadian lithium sectors are set to make progress in 2024, with several construction projects potentially starting to boost domestic lithium supply. According to an S&P Global report, while the lithium market has seen slow activity and falling prices, especially in Asia, long-term demand fundamentals remain strong due to the global transition toward electric vehicles (EVs) and energy storage.
Even though lithium prices dropped in 2023 after reaching record highs in 2022, the long-term outlook for the EV market remains promising. According to the report, EV sales are expected to reach 30.81 million units by 2027, and lithium prices are expected to stabilize between $20,000 and $25,000 per metric ton in the coming years. Despite the industry’s cyclical nature, current pricing remains strong enough to attract investment, especially with regulatory support driving the EV transition in countries like Canada.
According to industry experts like Rahul Sen Sharma, setbacks are common in large-scale industry transformations, and the lithium market is no exception. Jean-François Béland of Ressources Québec compared lithium’s importance in the 21st century to that of coal and oil in previous eras, which shows the crucial role of lithium in electrifying transportation.
Long-Term Outlook for Lithium
According to the International Energy Agency (IEA), lithium demand is projected to rise tenfold in the Net Zero Emissions scenario and could reach 1,700 kilotonnes (kt). The market is further supported by developments in battery storage, with lithium demand for storage expected to grow more than ten times by 2050.
While alternative technologies like sodium-ion and vanadium flow batteries may slightly impact lithium demand, the metal’s role in battery production remains dominant. Moreover, solid-state batteries could create a new demand for lithium metal by 2040.
On the supply side, lithium production has significantly increased, with current global output at 190 kt, mainly from Australia and Latin American countries like Chile and Argentina. By 2030, global supply is projected to rise to 450 kt in a base scenario, but further investments will be necessary to meet future demand, especially in meeting climate goals.
Dealing With Supply Shortages
According to Benchmark Mineral Intelligence, lithium-ion battery demand is projected to nearly quadruple by 2030, reaching 3.9 terawatt-hours. The market intelligence firm forecasts lithium surplus till 2029, but despite that, the firm says that the supply of environmentally and socially responsible lithium is currently insufficient to meet demand.
Sustainably sourced lithium is not enough to meet growing demand. By 2026, only 45% of lithium demand is expected to be met by recycled or sustainably mined lithium, dropping to 35% by 2030.
In light of that, Direct Lithium Extraction (DLE), is gaining traction as a more efficient and sustainable alternative. According to BloombergNEF, DLE is expected to contribute significantly to lithium supply by 2030 and could potentially rival the output of evaporative methods, if commercialized successfully.
Lithium can be sourced from hard rock deposits like spodumene and lepidolite, as well as from brine. The main challenge with the evaporative method is its slow processing time, taking up to 18 months to extract lithium. On the other hand, DLE can reduce this timeframe to two weeks while using land and water more efficiently. Despite a decline in lithium prices, investments in DLE continue, as it offers faster and more sustainable extraction from brine sources.
According to Benchmark, DLE is a promising technology that could help prevent future lithium supply shortages by efficiently extracting lithium from brines. It is expected to contribute 14% of the global lithium supply by 2035, especially from brines, geothermal, and oil fields. However, DLE faces challenges such as high costs, scalability issues, and inflation, which have increased project expenses.
DLE offers higher recovery rates (80-90%) compared to traditional evaporation methods (20-50%). Major oil companies like Exxon are investing in DLE due to its similarities with oil extraction. Despite its potential, DLE alone won’t solve the lithium market’s structural deficits in the short term.
With that, we look at the 11 Biggest Lithium Stocks to Buy Right Now.
11 Biggest Lithium Stocks to Buy Right Now
Our Methodology
For this article, we scoured through ETFs and stock screeners to find the 25 biggest players in the lithium and lithium battery industry that are listed on the NYSE or NASDAQ. We then narrowed down our list to 11 stocks most widely held by institutional investors. We listed the stocks in ascending order of their hedge fund sentiment which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
11 Biggest Lithium Stocks to Buy Right Now
11. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Market Capitalization as of September 6: $10.14 billion
Number of Hedge Fund Holders: 9
Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is a prominent Chilean company known for its production of lithium, iodine, and specialty plant nutrients. It is one of the world’s largest lithium producers and operates internationally in 110 countries across five continents.
The company has exclusive access to extensive deposits of caliche and brine in the Atacama Desert, which provide significant reserves of essential minerals, including the highest concentrations of lithium and potassium. In 2023, it sold lithium products to 207 customers in 39 countries, with a significant portion of its sales directed to Asia. The company held an 18% share of the global lithium market in the year. It is one of the biggest lithium and battery stocks to buy now,
Since 2017, the company has expanded its lithium operations globally, including acquiring spodumene resources in Western Australia through a partnership with Kidman Resources. The company has been increasing its production capacity, aiming to reach 210,000 metric tons of lithium carbonate by 2024.
On August 26, Jefferies maintained a Buy rating on the stock with a $55 price target, down from $62.8 as reported by The Fly. Jefferies revised its price target as it believes that Q2 results indicate that, despite the current low lithium prices, the company remains focused on its key projects and plans to increase its sales volumes by 2025. While it is logical for the company to prioritize maximizing production, this approach may not help with the short-term balance of the lithium market.
Before that, on August 9, Goldman Sachs upgraded its rating on the SQM stock from Neutral to Buy, with a price target of $46.50. Analyst Marcio Farid believes the potential benefits of investing in the stock outweigh the risks. Farid highlighted that the company is well-positioned to capitalize on expected improvements in lithium supply and demand dynamics by 2027.
In the second quarter, 9 hedge funds held positions worth $44.83 million in SQM. As of June 30, Kopernik Global Investors is the company’s largest shareholder with 640,997 shares, worth $26.12 million.
10. Ultralife Corporation (NASDAQ:ULBI)
Market Capitalization as of September 5: $153.433 million
Number of Hedge Fund Holders: 11
Ultralife Corporation (NASDAQ:ULBI) is a key player in the battery manufacturing industry as it offers a diverse range of lithium battery solutions and is one of the best battery stocks. The company produces both primary and secondary lithium batteries, including lithium manganese dioxide, lithium thionyl chloride, and lithium manganese dioxide carbon monofluoride hybrid types.
The batteries come in various configurations, such as 9-volt, HiRate cylindrical, and ThinCell, and are known for their high reliability and performance. They are crucial in demanding applications like military equipment, medical devices, emergency radio beacons, and industrial uses. The stock is one of our biggest lithium and battery stocks to buy right now.
At a stake value of $6.4 million, 11 hedge funds held positions in Ultralife (NASDAQ:ULBI) in the second quarter. As of Q2, Renaissance Technologies is the most significant shareholder in the company and has a position worth $2.575 million.
In the second quarter, the company reported earnings per share of $0.22 and revenues totaling $43 million, which reflects a strong growth trajectory. The Battery & Energy Products segment, which generated $36 million in revenue, was the primary driver of this growth, making up 84% of the company’s total revenue. The segment saw a significant 30.5% increase in government defense sales and a 20.1% rise in medical market sales.
Ultralife’s (NASDAQ:ULBI) strong cash flow has enabled the company to cut its debt by over 50% as of the second quarter, which improves its financial stability and reduces interest expenses.
The company is also expanding its product lineup and advancing several projects. It has set up a new manufacturing line for thin cell batteries designed for the medical wearable industry and is progressing with multiple qualification projects.
Additionally, a new chloride battery product is in the final testing stages with several customers, and significant progress is being made on an IoT battery pack. During the Q2 earnings call, the CEO announced a $0.3 million order for the company’s wearable product from an international client, which shows the company’s ability to secure valuable contracts and expand its market presence.
9. Lithium Americas Corp. (NYSE:LAC)
Market Capitalization as of September 6: $492.444 million
Number of Hedge Fund Holders: 13
Lithium Americas Corp. (NYSE:LAC) is a lithium exploration and development company that owns the Thacker Pass project which lies in McDermitt Caldera. The caldera is home to the largest known lithium deposit in the world. Lithium Americas (NYSE:LAC) is one of the biggest lithium stocks to buy now
The Thacker Pass project represents the company’s most significant growth opportunity, which is expected to capitalize on the rising demand for lithium fueled by the shift to electric vehicles and renewable energy storage.
Thacker Pass aims to produce 40,000 tonnes per annum of battery-grade lithium carbonate in its initial phase. The company is currently finalizing detailed engineering, procurement, and execution planning, with major earthworks completed and full construction expected to start later in 2024.
The project is supported by a $2.26 billion loan from the U.S. Department of Energy, and it is crucial for U.S. strategic interests. Moreover, General Motors’ exclusive rights to Phase 1 production for up to a decade show the project’s potential. With Phase 1 expected to supply lithium for around 800,000 EVs per year, Lithium Americas (NYSE:LAC) is positioned as a major player in the lithium market. Despite recent price pressures, the company’s management expects normalization of prices by the project’s 2026 operational launch.
On August 16, The Fly reported that B. Riley analyst Matthew Key reduced the price target for Lithium Americas (NYSE:LAC) from $4.50 to $4, but still maintained a Buy rating on the stock. This adjustment is due to the fact that the number of shares in circulation has increased after the company completed its recent financing.
In the second quarter, 13 hedge funds had stakes worth nearly $32 million in Lithium Americas (NYSE:LAC).
Massif Capital Real Assets Strategy stated the following regarding Lithium Americas Corp. (NYSE:LAC) in its Q2 2024 investor letter:
Lithium Americas Corp. (NYSE:LAC): No Massif Capital letter would be complete without examining something that is not working or that we got wrong. Thus far this year, the clear winner is our expectation that lithium would make a rebound. Lithium prices have continued to sell off, with lithium hydroxide and carbonate in China down ~10% since the start of the year and the lithium mining sector, as measured by the Global X Lithium ETF, down 18%. The fund’s two lithium investments, Lithium Americas Corp. (NYSE:LAC) and Lithium Argentina, are down 48% and 46%, respectively.
While the story with Lithium Americas, a development company focused on building an exceptionally large lithium asset in Nevada, is complicated, the story with Lithium Argentina is similar to the situation in Siemens Energy last year. The market tossed the baby out with the bath water. The firm’s Cauchari asset in Argentina is a bottom-cost quartile brine asset that is fully built, went into operation last year and continues ramping to full commercial production on schedule. At a 10% discount rate and $12,000 per ton lithium in perpetuity, we still think the firm’s 44% ownership stake in the mine is worth $6 a share, 82% above the current price. At $18,000 per ton, the mine is worth more than $15 a share to the company. The operating leverage to the lithium price is fantastic…” (Click here to read the full text)
