12 Best Young Stocks To Buy and Hold For 10 Years

8. Arcadium Lithium (NYSE:ALTM)

3-Year CAGR as of February 11: 33.36% 

Number of Hedge Fund Holders: 17

Arcadium Lithium (NYSE:ALTM) produces lithium chemical products, which include lithium hydroxide, lithium carbonate, and lithium metal, for various applications such as EVs, electronics, and industrial uses. It operates globally and has interests in properties in Argentina, Canada, and Western Australia.

Its lithium products business has three categories. The biggest one pertains to Lithium Hydroxide and Lithium Carbonate, showing the focus on the mainstream lithium chemical market. These are core lithium chemicals used in batteries and other applications. In Q3 2024, the company sold about 8,750 tons of these products, which generated $141.6 million in revenue. The average selling price was $16,200 per ton. In the first nine months of 2024, the company sold roughly 28,850 tons, which brought in $517.8 million in revenue at an average price of $18,000 per ton.

The company also sells Butyllithium and Other Lithium Specialties. These are more specialized lithium products. Q3 revenue for this segment was $39.4 million from about 480 tons (measured in Lithium Carbonate Equivalent). The average price was much higher, at $82,100 per ton (LCE). For the first nine months, this segment generated $130.2 million from ~1,390 tons (LCE) at an average price of $93,700 per LCE.

Despite short-term headwinds from volatile lithium prices, FPA Queens Road Small Cap Value Fund holds a small position in the company due to its low-cost assets, strong long-term outlook, and pending acquisition by Rio Tinto. It stated the following in its Q3 2024 investor letter:

“Arcadium Lithium plc (NYSE:ALTM) is an integrated, low-cost, well-managed lithium producer formed by the merger of Livent, which the Fund owned, and Allkem in Australia. The merger was completed at the beginning of this year and we received, and decided to hold, shares of Arcadium.25 The share price has declined because of volatile lithium prices that collapsed from bubbly levels at the beginning of 2023.26 Estimates for electric vehicle production are slowing and capacity got ahead of demand; the industry is now waiting for a supply response. On October 03, 2024, post quarter end, Arcadium announced that they are getting bought by Rio Tinto for $5.85 per share.

Arcadium is an unusual investment for us. We normally avoid the commodity and materials sectors, and have kept our position in Arcadium small. But we believe Arcadium has a unique position in an industry with a strong long-term outlook. The company has low-cost production assets, is virtually debt-free, and has considerable capacity additions planned near-term.”