In this article, we will take a look at the 12 Biggest Lithium Stocks to Buy According to Hedge Funds.
Lithium is a soft, silver-white alkali metal that has become a cornerstone of the clean revolution. Its commonly used form, lithium carbonate, is required for the production of lithium-ion batteries. These power a variety of technologies, including vast renewable energy storage systems and electric vehicles (EV), making them nearly indispensable in the development of sustainable energy solutions. Although EVs have been available for a while, it wasn’t until recent technology breakthroughs and cost reductions that they became a more reliable option for consumers, resulting in an increase in lithium demand. The International Energy Agency states that the demand for lithium will climb by over 40 times between 2020 and 2040, particularly for use in battery storage and electric cars. As per Fortune Business Insights, the global lithium market achieved a valuation of $22.19 billion in 2023 and is expected to reach $134.02 billion by 2032, reflecting a CAGR of 22.1%.
According to a McKinsey report, the global drive to net-zero will depend on guaranteeing a consistent supply of essential battery raw materials, especially as demand for EVs climbs toward the latter of this decade. Based on the report, the global market for BEV passenger cars is expected to increase sixfold between 2021 and 2030, with yearly sales rising from 4.5 million to almost 28 million units during that time. In addition, such a forecast indicates that the sector is “likely to confront persistent long-term challenges” in line with demand. McKinsey also states that 80% of all lithium mined now is used by battery manufacturers, and by 2030, that number may rise to 95%.
On the other hand, analysts predict increased volatility in lithium carbonate in 2024, following a challenging year in which the metal’s price plunged 22% due to a global supply glut. However, some balance is expected to recover. S&P Global predicts that as production cuts begin to reduce excess supply, lithium surplus would fall to 33,000 metric tons in 2025 from 84,000 metric tons in 2024. According to Chris Berry, president of House Mountain Partners, however, the behavior of the lithium price over the next year may be unpredictable. He said the following:
“Lithium price volatility is a feature of the energy transition and not a bug. You have a small but fast-growing market, opaque pricing, legislation designed to rapidly build critical infrastructure underpinned by lithium and other metals, and this is a recipe for boom-and-bust cycles demonstrated by extremely high and extremely low pricing.”
Photo by Mika Baumeister on Unsplash
Our Methodology
For our list of the 12 biggest lithium stocks to buy, we narrowed down companies involved in lithium mining and supply, lithium-ion battery sales, or technologies related to battery operations. The names on this list are ranked in ascending order according to the hedge fund sentiments surrounding them, using data from Insider Monkey’s Q3 2024 database.
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12. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 10
Lithium Americas Corp. (NYSE:LAC) is a Canadian mining company focused on extracting lithium from pegmatite and spodumene ores in Argentina and the United States. The Thacker Pass project in Nevada’s McDermitt Caldera, which contains the world’s largest measured lithium deposits, is the company’s primary focus.
Stifel analysts maintained their $8.50 price target and buy rating on Lithium Americas Corp. (NYSE:LAC) on January 8. Lithium Americas reported a 277% increase in lithium carbonate equivalent (LCE) to 44.5 million metric tons (MMt). At Thacker Pass, the company also announced an expanded project scope, which is expected to quadruple total production to 160,000 metric tons per annum (ktpa) LCE. Thacker Pass’s expanded scope is likely to increase its strategic value to both domestic industry participants and governmental organizations in the long run. This is especially important as the United States seeks to strengthen its critical mineral supply chain in the face of increasing Chinese pressure.
11. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)
Number of Hedge Fund Holders: 12
Chilean chemical company Sociedad Química y Minera de Chile S.A. (NYSE:SQM) manufactures industrial chemicals, iodine, lithium, and plant nutrients. SQM, one of the world’s largest lithium producers, relies primarily on the Atacama Desert’s abundant natural resources, which include the Tarapacá and Antofagasta regions.
Citi revised its outlook for Sociedad Química y Minera de Chile S.A. (NYSE:SQM) back in December, lowering the price target from $64 to $60 while maintaining a Buy rating. The updated price target accounts for the company’s expected 55% year-over-year decline in EBITDA in 2024, with average lithium prices forecast at $11,000 per ton, despite optimism about demand and production. Nonetheless, Citi expects a 22% year-over-year increase in EBITDA in 2025, driven by increased lithium sales volumes and a modest 10% price increase.
Although revenue met expectations at $1.08 billion, SQM reported adjusted earnings per share of $0.46 in the third quarter, $0.17 lower than the analyst consensus of $0.63. The company also reported $3.46 billion in total revenues for the first nine months of 2024, a significant decrease from the $6.16 billion recorded in the same period last year. Moreover, due to oversupply pressures, the company reported that average realized lithium prices fell 24% since Q2 2024, despite an 18% year-over-year increase in lithium sales volumes to more than 51,000 metric tons.
10. FREYR Battery, Inc. (NYSE:FREY)
Number of Hedge Fund Holders: 14
FREYR Battery (NYSE:FREY) is actively developing and manufacturing battery cells for use in electric mobility, stationary energy storage, and marine applications across Europe and around the world. The company’s primary goal is to provide environmentally friendly, large-scale battery solutions that aid international efforts to reduce emissions.
BTIG raised its price target for FREYR Battery (NYSE:FREY) from Neutral to Buy in December, with a revised price of $4. Prior to this upgrade, FREYR announced the purchase of a 5GW solar module facility in Texas from Trina Solar. The BTIG analyst believes that once the transaction is completed, FREYR will be able to begin generating earnings before interest, taxes, depreciation, and amortization.
FREYR Battery (NYSE:FREY) reported a $27 million loss in the second quarter of 2024, which exceeded analysts’ expectations. Despite these losses, the company still had $253 million in cash and no outstanding debt. As part of a strategic shift, FREYR Battery relinquished all rights to approximately 6.98 million shares of 24M Technologies’ Series G preferred stock and ended its licensing agreements with the company. Moreover, the European Union Innovation Fund awarded the company a €122 million grant to fund a joint venture Cathode Active Material manufacturing project in Finland.
9. Enovix Corporation (NASDAQ:ENVX)
Number of Hedge Fund Holders: 14
Enovix Corporation (NASDAQ:ENVX) is a market leader in advanced silicon-anode lithium-ion battery development and manufacturing. The company’s proprietary 3D cell architecture improves energy density while maintaining long cycle life. In several industries, including IoT devices, mobile phones, and electric vehicles, this puts the company at the top of its game.
With a non-GAAP EPS of $0.17, Enovix Corporation (NASDAQ:ENVX) reported outstanding results for the third quarter, exceeding forecasts by $0.03. The quarter’s revenue of $4.32 million exceeded projections by $0.21 million. The company also opened Fab2 in Malaysia and managed to secure a development agreement with a leading smartphone OEM for mass production launch in 2025.
On January 8, Enovix Corporation (NASDAQ:ENVX) announced that it had received a substantial pre-paid purchase order for a cutting-edge battery solution intended for next-generation wearables that use Mixed Reality (MR) from a notable player in immersive technologies. These batteries will be used to power smart glasses and augmented reality gadgets. According to the agreement, Enovix is expected to deliver the initial shipments by mid-2025.
8. Sigma Lithium Corporation (NASDAQ:SGML)
Number of Hedge Fund Holders: 16
Sigma Lithium Corporation (NASDAQ:SGML) is a major global producer of lithium that is committed to providing sustainable, carbon-neutral lithium concentrate for electric vehicle batteries. The company operates its Grota do Cirilo facility in Brazil, where it produces Quintuple Zero Green Lithium. This novel lithium is produced without the use of tailings dams, hazardous chemicals, potable water, or carbon emissions.
On January 14, BofA maintained a Buy rating on Sigma Lithium Corporation (NASDAQ:SGML) shares while lowering the price target from $25 to $16. Given that it expects “minimal industry discipline,” increased oversupply in 2025, and stagnant inventory levels, the firm has reduced its price recovery forecast for the year. Nonetheless, BofA remains “bullish on Sigma profit outlook, particularly post-2025,” citing low-cost operations and an expected $1.17/kg realized price in 2026.
Sigma Lithium Corporation (NASDAQ:SGML) exceeded its target of 60,000 tonnes of Quintuple Zero Green Lithium Concentrate in Q3 2024, producing 60,237 tonnes. Additionally, sales volumes increased by 9% from quarter to quarter, reaching 57,483 tonnes. Furthermore, the company keeps its cash operating expenses among the lowest in the industry.
7. Arcadium Lithium plc (NYSE:ALTM)
Number of Hedge Fund Holders: 17
Arcadium Lithium plc (NYSE:ALTM) is a chemical company that produces lithium chemicals for electric vehicles and portable electronics. Formed through the merger of Allkem and Livent in January of last year, the company provides high-purity lithium metal, butyllithium, lithium hydroxide, and lithium carbonate, which are essential for the electronics, electric car, pharmaceutical, and polymer industries.
Arcadium Lithium plc (NYSE:ALTM) reported third-quarter revenue of $203.1 million, attributable net income of $16.1 million, and adjusted EBITDA of $42.9 million. Despite lower market prices and volumes for some products, the company maintained an average lithium price of US$16,200 per metric ton. This figure is down slightly from the previous quarter, owing to slower demand and delays in expanding lithium carbonate production at Argentina’s Olaroz project.
6. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 20
Chinese automaker NIO Inc. (NYSE:NIO) is focused on producing high-end smart electric vehicles. One of the company’s most standout features is its battery-swapping technology, which allows drivers to quickly replace depleted batteries with fully charged ones at designated stations.
NIO Inc.’s (NYSE:NIO) vehicle margin increased from 11% in Q3 2023 to 13.1% in Q3 2024 on account of lower component costs and greater operational efficiency. The company set a quarterly record of 61,855 vehicle deliveries in the third quarter, up 11.6% year-over-year. In addition, with 61,023 deliveries, the NIO brand maintained its 48% market share for battery electric vehicles.
Earlier in December of last year, Citi expressed confidence in NIO Inc.’s (NYSE:NIO) financial goals for the coming years, reaffirming its buy rating and $8.90 price target. NIO’s sales targets for 2025 include a 10-to-20% increase in NIO brand sales YoY. By March 2025, 20,000 units of the Onvo brand’s L60 model are expected to be sold, with the segment’s monthly sales expected to increase by 30,000 to 50,000 units following the introduction of two new SUVs in the second half of 2025.
5. EnerSys (NYSE:ENS)
Number of Hedge Fund Holders: 30
EnerSys (NYSE:ENS) is a global leader in stored energy solutions for a wide range of markets and industries. It manufactures batteries and energy storage systems for electric vehicles. The company is divided into four main divisions: Energy Systems, Motive Power, Specialty, and New Venture.
On January 17, Oppenheimer analysts upgraded EnerSys’ stock (NYSE:ENS) from Perform to Outperform, setting a new price target of $115. The upgrade indicates a positive outlook for a number of variables that influence the company’s performance. Oppenheimer analysts attribute the higher rating primarily to a more optimistic telecom capital expenditure forecast and greater clarity regarding management transitions. More specifically, the analysts believe that the company has the ability to implement its core growth strategies.
Last year, EnerSys (NYSE:ENS) announced plans to invest $500 million in a lithium-ion cell gigafactory in South Carolina to advance battery production in the United States. The facility, which is expected to come online in late 2027, will manufacture various types of lithium-ion cells for commercial, industrial, and defense applications, with a total production capacity of 4 gigawatt hours (GWh) per year. In addition, the company anticipates that the factory will provide independence from non-domestic cell suppliers.
4. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 30
Rio Tinto Group (NYSE:RIO) is one of the world’s largest mining corporations, known for exploring and extracting a wide variety of mineral resources. The company’s mining portfolio includes minerals such as lithium, aluminum, copper, iron ore, diamonds, gold and molybdenum, among others. Unlike its competitors, Rio Tinto Group (NYSE:RIO) remains committed to lithium production and is one of the only major mining corporations that continues to make significant investments in lithium.
Last December, Rio Tinto Group (NYSE:RIO) announced the approval of $2.5 billion for the expansion of its first commercial-scale lithium operation, the Rincon project in Argentina, to produce 60,000 tonnes of battery-grade lithium carbonate annually. Along with lithium mining, Rio Tinto’s (NYSE:RIO) joint venture with Sumitomo Metal Mining strengthens the company’s position in the gold and copper industries, both of which are critical for EVs, especially as the Winu project progresses.
RBC Capital Markets maintained its Sector Perform rating on Rio Tinto Plc (NYSE: RIO) and a price target of GBP54.00 on January 17. The update followed reports of preliminary discussions between the mining giant and Glencore about a possible merger. However, this came as somewhat of a surprise, given that Glencore had previously contacted Chinalco, Rio Tinto’s largest shareholder, in July 2014 about a possible merger. Since then, both companies had gone on to different trajectories, with Glencore increasing its holdings, while Rio Tinto selling off its coal assets. RBC Capital expressed some doubts about the feasibility of a simple merger, stating that Rio Tinto’s shareholders might see the deal in Glencore’s favor. On the other hand, the firm also suggested that a deal structure could exist that might satisfy both parties’ shareholders.
3. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 36
Albemarle Corporation (NYSE:ALB) specializes in engineered specialty chemicals. Its Energy Storage division specializes in recycling, technical services, and lithium compounds. The company holds a strategic position within the EV supply chain on account of its dominance in the lithium market, with EV customers accounting for more than 80% of its sales. Albemarle’s portfolio is further diversified by its status as a pioneer in catalyst products and one of the top three bromine producers. As of 2020, Albemarle Corporation (NYSE:ALB) was the largest provider of lithium for electric vehicle batteries.
Truist Securities began coverage of Albemarle Corporation (NYSE:ALB) on January 27, giving it a Hold rating and a price target of $96. The analyst firm noted Albemarle’s proactive approach to mitigating the risks associated with a potential low-price environment. Albemarle’s decision to stop growth expenditures and pursue cost-cutting measures in the event of a market downturn is seen as a prelude to continuing operations. However, Truist thinks that the company’s 2025 and 2026 financial results might not live up to expectations.
During its Q3 2024 earnings call, Albemarle Corporation (NYSE:ALB) revealed that lower lithium prices had caused a sharp decline in net sales and earnings, resulting in a $1.1 billion loss and a $211 million drop in adjusted EBITDA. To address these issues, the company reported making strategic changes, including the reduction of capital expenditures by almost half for 2025 and introducing a new operating structure that should save $300 to $400 million.
2. FMC Corporation (NYSE:FMC)
Number of Hedge Fund Holders: 41
FMC Corporation (NYSE:FMC), founded in 1883 as an insecticide manufacturer, is an American chemical manufacturing company that has since expanded into other industries. FMC Corporation (NYSE:FMC) has spent decades developing and producing lithium amides, lithium alkoxides, lithium metal hydrides, alkyllithiums, and aryllithiums. These compounds are useful as reducing agents in the production of agricultural and pharmaceutical intermediates.
On January 21, Barclays analyst Benjamin Theurer upgraded FMC Corporation (NYSE:FMC) from Equalweight to Overweight, while maintaining a $65 price target. According to the analyst, the market expects an EV/EBITDA multiple of 9.3 times in 2025, based on Bloomberg consensus estimates, while the historical average for FMC is 12-13 times. Theurer provides a more optimistic assessment of the stock’s future performance, citing the historical multiple to suggest that the stock’s “normalized” pricing may exceed the current price target.
In the third quarter of 2024, FMC Corporation (NYSE:FMC) reported 12% organic sales growth and 9% sales growth. The company expects a 32% increase in EBITDA and a 19% increase in sales in the fourth quarter of the same year. By 2025, the company hopes to increase revenue by about 6%, at a potential cost of $200 million. As part of its ongoing innovation efforts, FMC plans to launch four new active ingredients and save $125 million to $150 million through restructuring by 2024.
1. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 99
Tesla, Inc. (NASDAQ:TSLA) specializes in electric vehicles and clean energy solutions. The company is renowned for its novel electric vehicle designs and production, as well as its position as a leading supplier of stationary battery energy storage systems for grid-scale and residential applications. Tesla, Inc. (NASDAQ:TSLA) recently announced a $1 billion investment in a lithium refinery in Texas to produce battery-grade lithium hydroxide in a sustainable manner. This facility is expected to produce 50 GWh per year, thus increasing battery supply while lowering costs.
Morgan Stanley reaffirmed its Overweight rating and $430 price target for TSLA on January 30. According to the firm’s analysis, Tesla, Inc. (NASDAQ:TSLA) is expanding beyond its core automotive focus to become a broader technology company with significant involvement in artificial intelligence and robotics. It’s expected that this shift will allow Tesla’s total addressable market (TAM) to include a number of new industries that aren’t accounted for in the financial models of many analysts and investors. Additionally, even though Tesla’s gross margin of 18.23% fell short of analyst expectations, the company’s 2024 revenue came in at a reported $97.15 billion.
While we acknowledge the potential of TSLA, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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