13 Best Lithium Stocks To Buy Now

Published on December 7, 2023 at 4:13 am by Sheryar Siddiq in Hedge Funds, News

In this article, we will take a look at 13 of the best 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 Best Lithium Stocks To Buy Now.

Often lauded as the ‘new oil’ of the clean energy era, Lithium (Li) is a chemical element that appears in its purest state as a soft silver metal. Although it is not naturally found in its metallic form, it exists in over 145 types of mineral ores. Extraction methods involve recovering it from hard rock or utilizing solar evaporation in extensive saltwater brine basins, such as those found in the South American Andes. In 2020, the European Union designated lithium as a “critical raw material,” alongside cobalt and nickel. These elements are also vital components for producing batteries necessary for the energy transition.

According to Fortune Business Insights, the global lithium market reached a valuation of $37.8 billion in 2022. Projections suggest a substantial growth path, with the market anticipated to reach $89.9 billion by 2030, demonstrating a noteworthy CAGR of 22.1% from 2023 to 2030. The surge in demand for hybrid and electric vehicles, coupled with the increasing need for energy-intensive portable electronics and storage systems, has significantly propelled the market’s advancement. The growing adoption of electric vehicles is driven by heightened environmental awareness, fueled by concerns about pollution, leading to a preference for vehicles that contribute to lower carbon emissions.

In this regard, electric vehicles are lauded as an eco-conscious choice, emitting fewer greenhouse gases throughout their lifecycle compared to traditional vehicles. Tesla, Inc. (NASDAQ:TSLA) is an example of a company that is actively involved in the development of advanced EV batteries, with a specific focus on lithium iron phosphate batteries. This initiative aims to reduce vehicle costs, extend the vehicle’s range beyond 400 miles, and potentially increase the battery’s lifespan to an impressive 1 million miles.

Currently, China takes the lead in every stage of the electric vehicle production chain. While its corporations contribute to only 14% of actual lithium mining, they play a significant role in refining, accounting for 89%. Additionally, China dominates the landscape with 75% of the world’s lithium-ion cell manufacturing and 70% of battery production plants. This prowess extends to electric vehicle production, where China is the foremost producer, responsible for 43% of global output.

Of course, it’s important to note that electric vehicles have been in existence for several years. Recent technological advancements and cost reductions have simply made them a more viable choice for consumers. Simultaneously, there has been a significant surge in the demand for lithium to meet consumer needs. According to a report from the International Energy Agency, the demand for lithium, especially for use in electric vehicles and battery storage, is expected to increase by more than 40 times between 2020 and 2040.

Anticipating the positive prospects driven by supply constraints and robust demand for lithium, investors are eyeing promising opportunities in the industry. Among the top lithium stocks to consider for potential growth are Tesla, Inc. (NASDAQ:TSLA), Rio Tinto Group (NYSE:RIO), and Albemarle Corporation (NYSE:ALB).

Photo by Mika Baumeister on Unsplash

Our Methodology

In the process of compiling our selection of the best 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 hedge fund investor participation in Q3 2023, designating them as the top lithium stocks to buy.

13. Lithium Americas Corp. (NYSE:LAC)

Number of Hedge Fund Holders: 9

Lithium Americas Corp. (NYSE:LAC) is a Canadian mining company involved in extracting lithium from spodumene and pegmatite ores in the United States and Argentina. With cost-effective production facilities and a strong presence in the electric vehicle (EV) battery market, the company maintains a competitive edge over its peers.

As of September 29th, Lithium Americas Corp. (NYSE:LAC) is engaged in discussions with the US Department of Energy (DOE) to secure a $1 billion loan for its Nevada project, poised to become North America’s largest lithium source.

Furthermore, on August 10th, reports indicate that Lithium Americas Corp. (NYSE:LAC)’ Caucharí-Olaroz project in Argentina has successfully achieved its inaugural lithium production. The project is set to scale up to its Stage 1 capacity, generating 40,000 tonnes per annum of battery-grade lithium carbonate by mid-2024. Additionally, the company is making strides in the Pastos Grandes Basin, advancing its $30 million development plan. A geophysics program has been completed to efficiently map the basin and facilitate the development of its brine production system.

By the end of the third quarter of 2023, 9 hedge funds, as tracked by Insider Monkey, had reported ownership stakes in Lithium Americas Corp. (NYSE:LAC). Notably, Steve Cohen’s Point72 Asset Management emerged as a major 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):

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)

Much like Tesla, Inc. (NASDAQ:TSLA), Rio Tinto Group (NYSE:RIO), and Albemarle Corporation (NYSE:ALB), Lithium Americas Corp. (NYSE:LAC) ranks as one of the best lithium stocks to buy.

12. Sigma Lithium Corporation (NASDAQ:SGML)

Number of Hedge Fund Holders: 15

Sigma Lithium Corporation (NASDAQ:SGML) is a leading Canadian mining company specializing in the exploration and development of lithium deposits in Brazil. The company holds full ownership of the Grota do Cirilo, Genipapo, Santa Clara, and São José properties, encompassing 27 mineral rights across a total area of approximately 191 square kilometers.

Earlier this September, Sigma Lithium Corporation (NASDAQ:SGML) announced the successful production of 22,500 tonnes of battery-grade, carbon-neutral lithium, branded as “Triple Zero Green Lithium.” This environmentally friendly product is free from hazardous chemicals and tailings, aligning with sustainability principles. The lithium has been prepared at Vitoria Port for transportation to Glencore as part of their collaborative partnership. The collaboration with Glencore aims to establish an eco-friendly and socially responsible lithium supply chain, catering to the global electric vehicle market.

As per Insider Monkey’s third quarter database, 15 hedge funds were long on Sigma Lithium Corporation (NASDAQ:SGML), compared to 12 funds in the previous quarter. Balyasny Asset Management, led by Dmitry Balyasny, is a notable stakeholder in the company, holding 540,139 shares valued at approximately $17.5 million.

11. FREYR Battery (NYSE:FREY)

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 primary objective is to offer large-scale, environmentally friendly battery solutions, contributing to the global efforts to reduce emissions.

At the end of Q3 2023, 16 hedge funds expressed confidence in FREYR Battery (NYSE:FREY), disclosing holdings valued at $171.7 million. This compares to the 18 positions reported in the previous quarter. As of Q3, Encompass Capital Advisors, led by Todd J. Kantor, holds the top investment position in the company, with a stake valued at $49.6 million.

10. QuantumScape Corporation (NYSE:QS)

Number of Hedge Fund Holders: 20

QuantumScape Corporation (NYSE:QS), positioned as a developmental stage company, is committed to the progress of solid-state lithium-metal batteries tailored for electric vehicles and various applications. This categorizes it as a stock suitable for long-term investment, given the potential for share value growth in the event of a substantial breakthrough.

QuantumScape Corporation (NYSE:QS) has showcased promising advancements in cell tests. As outlined in its recent quarterly report, the leading prototype A0 cell, developed in collaboration with Volkswagen, has not only exceeded its own performance benchmarks but has also outperformed any other automotive battery cell. Notably, the latest A0 prototype cell achieved over 1,000 full cycle equivalents with over 95% discharge energy retention in a battery testing lab associated with one of its potential customers. This accomplishment surpasses QuantumScape’s targets for commercialization, which were set at 800 cycles and 80% energy retention. The financial outlook is robust as well, with the Q3 report detailing $1.1 billion in liquidity following QuantumScape Corporation (NYSE:QS)’s successful raising of $300 million in gross proceeds during the quarter.

As per Insider Monkey’s database for the third quarter of 2023, 20 hedge funds were bullish on QuantumScape Corporation (NASDAQ:QS), compared to 17 funds in the previous quarter. Philippe Laffont’s Coatue Management has the largest position in the company, with 5.98 million shares valued at over $40.05 million.

9. Enovix Corporation (NASDAQ:ENVX)

Number of Hedge Fund Holders: 20

Enovix Corporation (NASDAQ:ENVX) is a prominent player in the advancement and manufacturing of advanced silicon-anode lithium-ion batteries, distinguished by its unique 3D cell design that enhances energy density while ensuring an extended cycle life.

Enovix Corporation (NASDAQ:ENVX) announced the successful completion of its acquisition of Routejade, a well-established Korean battery manufacturer, on November 1. This strategic move marks a significant step for Enovix Corporation (NASDAQ:ENVX), offering vertical integration covering electrode coating and battery pack manufacturing. The acquisition also brings onboard an established lithium-ion battery business, complete with two factories in Korea, along with complementary products, customers, and suppliers.

By the end of 2023’s third quarter, 20 out of the 910 hedge funds tracked by Insider Monkey had held a stake in Enovix Corporation (NASDAQ:ENVX). Peter S. Park’s Park West Asset Management is the company’s biggest hedge fund investor since it owns $47.7 million worth of shares.

8. Livent Corporation (NYSE:LTHM)

Number of Hedge Fund Holders: 24

Livent Corporation (NYSE:LTHM), a fully integrated lithium company, manufactures lithium for use in a range of lithium products, which are used primarily in lithium-based batteries, specialty polymers and chemical synthesis applications.

Livent Corporation (NYSE:LTHM) announced on November 14 that the planned $10.6 billion merger with Australia’s Allkem has successfully secured all necessary pre-closing regulatory approvals. The anticipated closing date is January 4, contingent upon Allkem shareholders voting in favor at the December 19 meeting. The resulting entity, named Arcadium Lithium, is poised to become the world’s third-largest producer of the essential metal used in electric vehicle batteries.

Insider Monkey’s third quarter of 2023 survey covering 910 hedge funds revealed that 24 funds were Livent Corporation (NYSE:LTHM)’s investors. Israel Englander’s Millennium Management is a notable hedge fund investor courtesy of its $52.04 million stake.

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.”

7. Sociedad Química y Minera de Chile S.A. (NYSE:SQM)

Number of Hedge Fund Holders: 24

Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is a Chilean chemical company specializing in the production of plant nutrients, iodine, lithium, and industrial chemicals. Recognized as one of the world’s largest lithium producers, SQM primarily operates in the Atacama Desert, covering the Tarapacá and Antofagasta regions, leveraging the area’s abundant natural resources. It provides derivatives and carbonates for battery applications, among other uses.

According to Insider Monkey’s Q3 2023 research, 24 out of 910 hedge funds had investments in the company. The most substantial hedge fund investment in Sociedad Química y Minera de Chile S.A. (NYSE:SQM) in our database is by Ken Griffin’s Citadel Investment Group, which holds shares valued at $70.96 million.

Similar to Tesla, Inc. (NASDAQ:TSLA), Rio Tinto Group (NYSE:RIO), and Albemarle Corporation (NYSE:ALB), Sociedad Química y Minera de Chile S.A. (NYSE:SQM) is a top pick as one of the best lithium stocks.

6. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Holders: 27

Rio Tinto Group (NYSE:RIO) stands as one of the largest diversified mining companies globally, dedicated to the exploration, mining, and processing of a broad spectrum of mineral resources. The company’s extensive portfolio encompasses minerals such as lithium, aluminum, copper, iron ore, diamonds, gold, borates, titanium dioxide, salt, silver, and molybdenum.

In October 2023, UBS revised its rating on Rio Tinto Group (NYSE:RIO), upgrading the shares from Sell to Neutral. The analysis emphasized the potential stabilization of iron ore prices within the $100 to $130 per tonne range over the next six months. This stability is expected to position Rio Tinto Group (NYSE:RIO) to provide attractive dividends to investors, with UBS estimating a dividend yield of 7% for the stock.

During the September quarter of 2023, among the 910 hedge funds monitored by Insider Monkey, 27 had initiated positions in the company’s shares. Fisher Asset Management, led by Ken Fisher, emerged as the largest hedge fund investor in Rio Tinto Group (NYSE:RIO) with a substantial stake valued at $990 million.

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