7 Undervalued Lithium Stocks to Invest In

2. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Holders: 39

Forward Price to Earnings (P/E) Ratio: 9.12

Rio Tinto Group (NYSE:RIO) is a leading global mining company that explores, extracts and processes minerals. The company operates in four segments: Minerals, Aluminum, Iron Ore, and Copper. Rio Tinto is expanding its footprint in battery materials, particularly lithium, to support the energy transition while iron ore remains a key revenue driver.

Rio Tinto Group (NYSE:RIO) delivered a strong financial performance despite the declining iron ore prices in 2024. Backed by effective cost management and portfolio diversification, the company reported an underlying EBITDA of $23.3 billion and net earnings of $11.6 billion. Strong working capital management was reflected in the operating cash flow, which reached $15.6 billion. In addition, Rio Tinto declared a full-year dividend of $6.5 billion, maintaining a 60% payout ratio for the ninth consecutive year. The company allotted $1 billion for ongoing closure activities to restore previously mined sites.

To strengthen its position in battery materials, Rio Tinto is rapidly expanding its lithium portfolio. It took a significant step in its lithium strategy by announcing a $6.7 billion all-cash acquisition of Arcadium Lithium plc, projected to close in March 2025. In addition, Rio Tinto Group (NYSE:RIO) authorized a $2.5 billion investment to expand the Rincon lithium project in Argentina, aiming for an annual production capacity of 60,000 tons of battery-grade lithium carbonate.

Rio Tinto Group (NYSE:RIO) anticipates a capital investment of approximately $11 billion in 2025, with $3 billion allotted to growth projects. The company plans up to $6 billion in total spending through 2030, as decarbonization remains a priority. As an undervalued lithium stock, its strategic takeovers and project developments position it to take advantage of growing demand in the energy transition sector as the lithium market expands.