With growing demand for all things green, it’s time to buy the weakness in lithium stocks.
Exxon Mobil (NYSE:XOM), for example, just said lithium demand will grow. “What we’re seeing right now in lithium is the sentiment is bearish, says Exxon’s lithium global business manager, Patrick Howarth, as quoted by Bloomberg. “But underlying that is a demand growth story for EVs and the lithium-ion batteries that go into EVs. We know the world urgently needs more lithium than it’s producing today.”
With regards to the electric vehicle sales boom, it’s accelerating again.
Kelley Blue Book just reported that 330,460 EVs were sold in the U.S. during the second quarter, an 11.3% jump year over year. It’s also 23% better than the first quarter. Better, those numbers will only improve moving forward, which will only increase the need for more lithium.
That’s a strong reason to buy current weakness in lithium stocks, such as:
Lithium Stocks That Could Be Multibaggers: Albemarle (ALB)
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Albemarle (NYSE:ALB), the lithium industry’s 800 lb. gorilla has been struggling at around $95 a share. Not expecting ALB to stay this low for long, I’d buy it here. Better, while we wait for it to recover, we can collect its dividend of $0.405, which is payable Oct. 1 to shareholders of record as of Sept. 13.
While recent downgrades from HSBC, Citi, and Wells Fargo are also weighing on the stock, the pullback has become overkill. With plenty of fear now priced in and a potential near-term recovery in lithium prices thanks to EV sales, it’s time to buy the excessive fear here. In addition, if the Federal Reserve does cut interest rates this year, as expected, it could drive electric vehicle sales, and related EV-related investments even higher.
Helping, recent earnings growth wasn’t too shabby. In its first quarter, the company posted adjusted earnings per share of 26 cents, which beat by a penny. Also, its total revenue did rise to $1.36 billion, which was better than the $1.29 billion forecast.
Sociedad Quimica Y Minera (SQM)
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Sociedad Quimica Y Minera (NYSE:SQM) is also a buy on weakness.
Currently bouncing around in a channel between $40 and $42.50, I’d like to see SQM break higher, with a potential test of $50 near term. While we also wait for SQM to recover, we can collect its yield of about 5.09%.
Granted, earnings haven’t been hot, but that’s to be expected at the moment. In its first quarter, its EPS loss of $3.04 missed by $1.46. Revenue, down 52.2% year over year, also missed by $60 million. However, it looks like the stock is priced in that weakness, as well as weakness from lithium prices. Plus, the company did raise its FY 2025 numbers.
According to SQM Chief Executive Officer Ricardo Ramos: “We believe that the strong demand growth in the lithium market seen since the beginning of the year could continue for the remainder of the year, with total lithium demand surpassing 1.1 million metric tons during 2024. Given this positive trend in demand growth, especially in China which accounts for almost 75% of global lithium demand, and our updated sales volumes outlook for the year, we believe that our sales volumes could reach 200,000 metric tons in 2024.”
Standard Lithium (SLI)
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Another one of the top lithium stocks to buy is Standard Lithium (NYSEAMERICAN:SLI), which has been bucking the industry downtrend.
Over the last few days, the stock ran from strong support at around $1.20 to $1.45 on a volume spike to 1.12 million shares. The average volume for SLI has been 1.083 million. Better, there’s a consensus strong buy rating on SLI with an average price target of $3.97. The highest price target at the moment is $4.75.
Helping, Standard Lithium recently announced its partnership with Equinor to develop large-scale lithium projects in the Smackover Formation of east Texas and southwest Arkansas.
Plus, according to Statista, global lithium demand could reach 3.8 million tons by 2035. Even better, the International Energy Agency says that based on current electric vehicles and battery storage, lithium demand could soar 13 times over by 2040.
All of which could help push SLI to higher highs.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
