Lithium prices fell more than 81% in 2023, but 2024 is seeing prices rebound.
Last year, lithium carbonate, the rare earth mineral needed to make lithium-ion batteries that power electric vehicles and smartphones, had seen quite some price pressure. High interest rates coupled with commodity saturation led to falling prices for the top lithium stocks. Looking at lithium prices today, the story looks a bit different. In particular, the rare earth mineral has seen an uptick in its price. Lithium carbonate prices have increased more than 14% on a year-to-date perspective.
Given how the market has hammered some of the top lithium stocks lately, there are bound to be investing opportunities in the space. Here are the three top lithium stocks to consider buying in April.
Pilbara Minerals (PILBF)
Source: Shutterstock
Pilbara Minerals (OTCMKTS:PILBF) is an Australian lithium miner that maintains a 100% ownership and management of the Pilgangoora mine project in Western Australia. While this company’s operations might sound far away for U.S. investors, this particular mine is one of the world’s largest hard-rock lithium-tantalum deposits and allows PILBF to produce 640,000 to 680,000 tons of spodumene concentrate per year.
In 2024, Pilbara has continued to sign and extend off-take agreements, and not just ones related to powering EV batteries. Specifically, Pilbara and Chengxin Lithium, a lithium-based chemicals producer, extended their off-take agreement to 2026 that will ensure spodumene concentrate supplies for the Chinese chemicals company. Similarly, Pilbara expanded its spodumene off-take agreement with Chinese lithium producer Ganfeng Lithium (OTCMKTS:GNENF).
These developments point to a positive future for PILBF as its boosts mining production in the short and medium terms.
Albemarle (ALB)
Source: IgorGolovniov/Shutterstock.com
Albemarle’s (NYSE:ALB) assets include brine operations in Chile and Argentina, hard rock mines in Australia as well as joint ventures in China and the U.S.
ALB shares have been hard hit since 2023. Falling lithium prices are, of course, to blame. The miner’s fourth quarter 2023 report showed how much lithium prices had a toll on Albemarle’s financial figures. Revenue declined by 10.1%, while EPS declined by 160%. The lithium producer’s stock price has fallen around 22% on a year-to-date basis.
Current EV market conditions are not helping to comfort investor sentiment either. Still, like I’ve maintained in the past, despite the ongoing market slump, electric vehicles are likely here to stay. China’s EV market still appears to be dynamic, which means lithium is still in demand in the world’s second largest economy and bolsters the argument for investing into a stock like ALB.
Wall Street appears to agree. Bank of America, UBS, and Berenberg have recently increased their price targets for ALB as well as upgraded the company’s ratings. ALB’s 12-month average price target of $152.40 implies a 36% return at its current share price.
Albemarle’s stock trades at around 29.6x forward earning. Further selling pressure could make ALB shares even more attractive.
Ganfeng Lithium (GNENF)
Source: T. Schneider / Shutterstock.com
Ganfeng Lithium (OTCMKTS:GNENF) is a lithium miner based in China, the world’s second largest economy. Excess inventories and waning demand from the EV market have severely hurt GNENF’s share price. Shares have dipped nearly 25% as of the end of trading on Tuesday of this week.
The bright spot in Ganfeng’s future is related to the resilience of China’s EV industry. Electric vehicle makers including BYD (OTCMKTS:BYDDY), Li Auto (NASDAQ:LI), and Nio (NASDAQ:NIO) all posted solid growth figures at the end of the first quarter. This signals lithium demand is still out there, and Ganfeng will likely be a beneficiary of this. Korean automaker Hyundai (OTCMKTS:HYMTF) signed a 4-year supply agreement with Ganfeng earlier in the year, underscoring lithium customers are planning for the long-term and are not so worried about short-term slumps. Investors should take some cues.
Ganfeng Lithium shares are trading at 21.5x forward earnings, and additional selling pressure could put GNENF stock into a real sweet spot.
On the date of publication, Tyrik Torres 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.
