The lithium market faces challenges as electric vehicle (EV) demands wane and investors depart from related companies.
However, the global economy is no stranger to change. A key component of EV batteries, Lithium may experience a sudden wave of innovation as more countries adopt greener technologies. Admittedly, I don’t know when the lithium market will experience a resurgence of growth. What I do know is that, with low prices, now is a great time to add some lithium stocks to my portfolio.
So, considering companies with the expertise, capacity, and foundations, I have three that I’m watching.
Albemarle Corporation (ALB)
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If you follow the lithium market, Albemarle Corporation (NYSE:ALB), the largest global lithium producer, should be a familiar name. The stock’s price has significantly declined due to lithium’s downward price performance and a recently announced equity offering.
Regardless, Albemarle Corporation is an industry giant. And, it has a good chance for recovery once lithium prices grow and demand picks up. Value seekers may see this as an opportunity to start picking up ALB stock at a low price as growth and capacity supplies the global need for lithium – thanks to a greener economy.
Also, Albemarle reported a strong 2023 sales record of $9.6 billion, representing a 31% year over year (YOY) growth, cementing its position as a global leader. While the company experiences challenges in China, it has achieved the second-highest net income in its history. It reached $1.6 billion, equivalent to $13.36 per diluted share.
One of its key ongoing projects is the mechanical completion of the Meishan lithium conversion plant, which gives the company more potential for future growth. With its strong performance and growing presence in the lithium industry, ALB is a buy.
Exxon Mobil Corporation (XOM)
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While the company is known for its oil, energy, and petrochemical operations, Exxon Mobil Corporation (NYSE:XOM) operates diversified businesses. These include energy products, specialty products, exploration of natural gases, and MobilTM lithium.
In 2023, the company started drilling on the Arkansas lithium well; production is expected in 2027. As per company filings, Exxon Mobil corporation “aims to produce enough MobilTM Lithium with the potential to supply approximately one million EVs per year.”
Notably, the company’s entry into the lithium market pits the oil giant against global competitors. However, XOM’s strong relationship with the automotive industry and its brand recognition open it up to newly fostered business relationships in the future.
Exxon’s fiscal year 2023 earnings reached $36.0 billion, decreasing by $19.7 billion YOY. Still, the company reiterated its commitment to shareholder value by giving back $32.4 billion in dividends and buybacks. Currently, the company pays a 95 cent per quarter dividend, or $3.80 annually, which translates to a 3.27% yield.
With the fast globalization of a green economy on its tracks, investors should keep tabs on XOM stock as it prepares to capture a big part of this growing EV and lithium industry.
Arcadium Lithium (ALTM)
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Born from the merger of Allkem and Livent, Arcadium Lithium (NYSE:ALTM) is a chemical producer specializing in lithium products.
Livent’s lithium processing technologies and Allkem’s growth pipeline make Arcadium Lithium a global lithium powerhouse. Their products are used in battery-grade lithium carbonate, lithium hydroxide, and butyllithium applications.
ALTM stock price had a rough time since the beginning of 2024, down 36.49% on the back of unfavorable market conditions. However, its fiscal year 2023 financials were excellent.
Revenue grew to $882.5 million from $813.2 million last year. Meanwhile, net income rose to $330.1 million, slightly higher than last year’s $273.5 million. Also, ALTM reported a 40% increase in lithium carbonate and hydroxide volumes.
Furthermore, management foresees significant savings of $60 to 80 million in 2024 through its streamlined operations and synergies. With the continued adoption of EVs and its strong financials, the company is an excellent addition to any lithium stocks portfolio.
On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
