In this article, we will take a look at 11 of the most profitable lithium stocks to buy now. To skip our analysis of the lithium industry and its impacts on the battery and EV sectors, go directly to the 5 Most Profitable Lithium Stocks Now.
The worldwide demand for lithium batteries has been on the rise in recent years, propelled by the acceleration of the shift toward electric vehicles and heightened dependence on energy storage. As per a report by McKinsey, the battery industry is poised for expansion in the coming decade, projected to reach a capacity of almost 4.7 terawatt-hours (TWh) by the conclusion of 2030. This surge is expected to result in a market value exceeding $400 billion, with an annual growth rate of around 30% starting from 2022, surpassing the earlier forecasted 25%.
As reported by Fortune Business Insights, the global lithium market achieved a valuation of $37.8 billion in 2022. Projections indicate a substantial growth trajectory, with the market expected to reach $89.9 billion by 2030, reflecting a notable CAGR of 22.1% from 2023 to 2030. The increased demand for hybrid and electric vehicles, combined with the rising necessity for energy-intensive portable electronics and storage systems, has significantly propelled the market’s progress. The surge in electric vehicle adoption is influenced by heightened environmental consciousness, driven by concerns about pollution, leading to a preference for vehicles with lower carbon emissions.
The factors fueling the expansion of lithium companies encompass regulatory transitions towards eco-friendly technologies, increasing acceptance of battery technology among consumers, and the introduction of new battery-powered products by energy, electronics, and automotive companies. Illustrations of these catalysts include the US Inflation Reduction Act, the European Union’s directive to ban internal combustion engine vehicles by 2035, India’s implementation of policies promoting hybrid vehicles in its significant developmental landscape, and expert forecasts indicating that electric vehicles will constitute 90% of total passenger car sales in specific countries by 2030.
Of course, it’s crucial to acknowledge that electric vehicles have existed for many years. Recent technological progress and cost efficiencies have, however, elevated them as a more practical option for consumers. For that reason, there has been a substantial upswing in the demand for lithium to fulfill consumer requirements. As per a report by the International Energy Agency, the demand for lithium, particularly for applications in electric vehicles and battery storage, is projected to surge by over 40 times from 2020 to 2040.
With optimistic prospects fueled by supply constraints and strong lithium demand, investors are exploring potential opportunities in the industry. Noteworthy lithium stocks to consider for potential growth include Tesla, Inc. (NASDAQ:TSLA), Rio Tinto Group (NYSE:RIO), and Albemarle Corporation (NYSE:ALB).
A close-up of an open-pit mine in the Carolina Lithium Project.
Our Methodology
In the process of compiling our selection of the most profitable lithium stocks, we initially identified companies involved in lithium mining and supply, lithium-ion battery sales, or technologies related to battery operations. From this pool, we selected the stocks with the highest trailing twelve-month net income. We also conducted a thorough analysis of Insider Monkey’s Q3 2023 database to identify leaders in the lithium market, evaluated by hedge fund sentiment. Over the past decade, the top 10 consensus stock picks of hedge funds have outperformed the S&P 500 Index by more than 140 percentage points (see the details here). This is a significant outperformance, and it underscores the importance of closely monitoring this frequently overlooked indicator.
11. Lithium Americas Corp. (NYSE:LAC)
Latest TTM Net Income: -$30.69 million
Number of Hedge Fund Holders: 9
Lithium Americas Corp. (NYSE:LAC), a Canadian mining entity specializing in lithium extraction from spodumene and pegmatite ores in the United States and Argentina, maintains a competitive advantage in the electric vehicle (EV) battery market due to its cost-effective production facilities.
As of September 29th, Lithium Americas Corp. (NYSE:LAC) is in negotiations with the US Department of Energy (DOE) to secure a $1 billion loan for its Nevada project, positioned to become the largest lithium source in North America.
As of the third quarter of 2023, Insider Monkey’s hedge fund data indicates that 9 hedge funds have reported ownership stakes in Lithium Americas Corp. (NYSE:LAC). Notably, Steve Cohen’s Point72 Asset Management has emerged as a significant stakeholder in the company, holding a position valued at approximately $18.76 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):
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)
Similar to Tesla, Inc. (NASDAQ:TSLA), Rio Tinto Group (NYSE:RIO), and Albemarle Corporation (NYSE:ALB), Lithium Americas Corp. (NYSE:LAC) ranks as one of the most profitable lithium stocks to invest in.
10. FREYR Battery (NYSE:FREY)
Latest TTM Net Income: -$22.5 million
Number of Hedge Fund Holders: 16
FREYR Battery (NYSE:FREY) is actively involved in the production and advancement of battery cells used in stationary energy storage, electric mobility, and marine applications across Europe and globally. The company’s core mission is to provide large-scale, eco-friendly battery solutions, aligning with global initiatives to curb emissions. On November 9, FREYR Battery (NYSE:FREY) posted earnings for the third quarter of 2023, beating market estimates on earnings per share by $0.16.
As of the conclusion of Q3 2023, 16 hedge funds exhibited confidence in FREYR Battery (NYSE:FREY), revealing holdings with a total value of $171.7 million. This marks a slight decrease from the 18 positions reported in the preceding quarter. Encompass Capital Advisors, under the leadership of Todd J. Kantor, claims the leading investment position in the company as of Q3, with a stake valued at $49.6 million.
9. Piedmont Lithium Inc. (NASDAQ:PLL)
Latest TTM Net Income: -$7.29 million
Number of Hedge Fund Holders: 10
Piedmont Lithium Inc. (NASDAQ:PLL) stands out as a leading lithium producer globally, distinguished for its cost-effective operations. Operating in the exploration stage, the company is engaged in the active exploration and advancement of resource projects within the United States. Its key asset is full ownership of the Carolina Lithium Project, spanning approximately 3,116 acres located within the Carolina Tin-Spodumene Belt.
On November 9, investment advisory B Riley maintained a Buy rating on Piedmont Lithium Inc. (NASDAQ:PLL) stock and lowered the price target to $53 from $57.
At the end of the third quarter of 2023, 10 hedge funds in the database of Insider Monkey held stakes worth $43 million in Piedmont Lithium Inc. (NASDAQ:PLL), compared to 14 the preceding quarter worth $66 million.
8. Sensata Technologies Holding plc (NYSE:ST)
Latest TTM Net Income: $311.48 million
Number of Hedge Fund Holders: 28
Sensata Technologies Holding plc (NYSE:ST) is a company focused on engineering technology, specializing in the sale of sensors and related products for the automotive and aerospace industries. Additionally, the company offers battery management systems designed to assess battery charge rates, performance, and various parameters.
During Q3 2023, Sensata Technologies Holding plc (NYSE:ST) demonstrated robust financial performance, achieving an adjusted EPS of $0.91. This represented a substantial increase compared to the previous year, surpassing market expectations. Despite the positive earnings, the company experienced a marginal decrease in revenues by 1.7% to $1,001.3 million. Conversely, Performance Sensing revenues witnessed a 2% increase, while slower growth in industrial revenue affected Sensing Solutions’ operating income.
In the third quarter of the current year, 28 out of the 910 hedge funds in Insider Monkey’s database held a stake in Sensata Technologies Holding plc (NYSE:ST). The largest investor among them is Robert Joseph Caruso’s Select Equity Group, possessing 6.62 million shares valued at $250.67 million.
7. Livent Corporation (NYSE:LTHM)
Latest TTM Net Income: $375.1 million
Number of Hedge Fund Holders: 24
Livent Corporation (NYSE:LTHM), a fully integrated lithium company, produces lithium for a variety of applications, primarily focusing on lithium-based batteries, specialty polymers, and chemical synthesis.
On November 14, Livent Corporation (NYSE:LTHM) announced the successful acquisition of all required pre-closing regulatory approvals for its planned $10.6 billion merger with Australia’s Allkem. The expected closing date is January 4, pending approval from Allkem shareholders at the December 19 meeting. The resulting entity, named Arcadium Lithium, is set to become the world’s third-largest producer of this essential metal crucial for electric vehicle batteries.
According to Insider Monkey’s third-quarter 2023 survey, which analyzed 910 hedge funds, Livent Corporation (NYSE:LTHM) attracted investments from 24 funds. Notably, Millennium Management, managed by Israel Englander, is a significant hedge fund investor with a stake valued at $52.04 million.
FPA Queens Road Small Cap Value Fund made the following comment about Livent Corporation (NYSE:LTHM) in its Q3 2023 investor letter:
“Livent Corporation (NYSE:LTHM) is an integrated, low-cost lithium producer that was spun out from FMC in 2018. This is an unusual investment for us – we normally avoid the commodity and materials sectors and have kept our position in Livent small. But we believe Livent has a unique position in an industry with a strong long-term outlook. The company generates cash, is virtually debt-free (as of Sep 30, 2023), and has considerable capacity additions planned near-term. In May, Livent announced an all-stock combination with Australia’s Allkem that should add scale, allow for cost reductions, and help consolidate the market. 25 The company’s share price has declined along with lithium prices despite Livent’s relatively long-term contracts and reiteration of 2023 guidance.”
6. FMC Corporation (NYSE:FMC)
Latest TTM Net Income: $592.9 million
Number of Hedge Fund Holders: 30
Established in 1883 in Philadelphia, Pennsylvania, FMC Corporation (NYSE:FMC) has transformed from its origins as an insecticide producer into a diverse chemical manufacturing enterprise. The company is recognized for its groundbreaking contributions to the development and production of alkyllithiums, aryllithiums, lithium amides, lithium alkoxides, and lithium metal hydrides. These compounds play a crucial role as reducing agents in the synthesis of pharmaceutical and agricultural intermediates.
On October 16, Kevin McCarthy, an analyst at Vertical Research, upgraded FMC Corporation (NYSE:FMC)’s stock from Hold to Buy, setting a price target of $94. While expressing caution for the remainder of the current year, McCarthy anticipates market conditions to stabilize in 2024.
As of the end of Q3 2023, 30 out of the 910 hedge funds profiled by Insider Monkey had acquired and held shares of the company. The largest hedge fund investor in FMC Corporation (NYSE:FMC) was Millennium Management, led by Israel Englander, with a substantial investment of $108 million.
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Disclosure. None. 11 Most Profitable Lithium Stocks Now is originally published on Insider Monkey.
