Big upside in cheap lithium stocks is a product of rapidly growing demand. Lithium, aka white petroleum, is an important metal used in the production of electric vehicle batteries. According to Grand View Research, the overall market is expected to grow at a compound annual rate of 12% between 2022 and 2030.
Automobile manufacturers are investing heavily in EV development, signaling lithium producers to identify viable resources as quickly as possible.
In turn, investors have realized that lithium stocks have the inherent potential to produce outsized gains. All of these cheap lithium stocks to buy for big upside possess that same potential.
|GNENF||Ganfeng Lithium Group||$8.80|
|SQM||Sociedad Quimica y Minera||$93.08|
Sigma Lithium (SGML)
Sigma Lithium (NASDAQ:SGML) stock has great potential due to the company’s near-term plans to significantly ramp up lithium production. The firm intends to increase production to a level that will place it among the top producers globally.
It is currently constructing its 100% owned Groat do Cirilo mine in the Brazilian state of Minas Gerais. The project is being developed on one of the largest and highest-grade hard rock lithium spodumene deposits globally.
Sigma Lithium will soon be commissioning the project and expects to have a commercially shippable product ready by April. The company expects to produce 100,000 tonnes of lithium carbonate equivalent (LCE) by 2024 which, if achieved, will put it among the top four global lithium producers.
The company currently estimates that its mineral resources amount to 984,000 tonnes of LCE meaning its mining operations will operate over a long period of time. The risk is obvious, however, the company is on the cusp of legitimate commercialization and that makes the upside substantial.
Livent (NYSE:LTHM) stock is expected to appreciate in price by more than 40% over the next 12 to 18 months. That is roughly in line with expectations about Livent’s earnings and revenue growth through 2023. Analysts expect that the company will see revenues grow from $834 million in 2022 to $1.12 billion in 2023.
Livent recorded $420 million in 2021 revenues. So, a clear pattern is emerging with the firm rapidly growing its revenue base by hundreds of millions of dollars each year during that period.
The company is expanding its production footprint in order to increase capacity. It is expanding in Argentina and should be finished in late 2022.
That project is expected to be producing lithium in early 2023. Livent anticipates that it will increase its capacity in China by 15,000 tonnes by the end of 2023. And it expects its Quebec operations to be commercially productive by 2026 with a 30-year mine life.
Lithium Americas (LAC)
Analysts are extremely positive about the prospects for Lithium Americas (NYSE:LAC). A lot of that enthusiasm has to do with its 100% interest in Thacker Pass and what that could mean for its future prospects.
Thacker Pass is located in Nevada and is the second-largest lithium mine in the world based on proven and probable reserves. The mine has 179.4 megatonnes of lithium of which 3.1 megatonnes in lithium carbonate equivalent (LCE). The mine is on the cusp of production and is expected to have a life of 46 years.
Lithium Americas also has operations in Argentina but it is separating the firm into two public entities to take advantage of the U.S. opportunity.
Thacker Pass construction should commence in 2023 and is dependent on permitting that looks likely. The site produced battery-grade product samples and is expected to feature heavily in the U.S. lithium supply chain of the future.
Lithium America’s Argentina operations are expected to come online in 2022 and produce 40,000 tonnes LCE.
Ganfeng Lithium Group (GNENF)
Ganfeng Lithium Group (OTCMKTS:GNENF) is China’s largest lithium compounds producer and the world’s largest lithium metal producer. That fact, combined with the fact that China is the largest EV market, makes GNENF stock one to buy for its massive upside.
And yes, it still has a massive upside despite being as large and well-established as it is already. In fact, its upside based on the target price is quite astounding. While GNENF shares trade for less than $9, they have a target price above $92. That equates to a 960% upside, making Ganfeng Lithium very difficult to ignore.
Sure, Ganfeng is a Chinese firm listed on an American exchange as an American Depositary Receipt (ADR). So the geopolitical risk that it will be delisted exists. However, that is unlikely as China and the U.S. both appreciate investor capital no matter its origin.
The company boasts over 100,000 tonnes of LCE supply capacity this year and expects it to grow to 600,000 tonnes LCE before 2030.
Albemarle (NYSE:ALB) stock has serious upside, a small dividend, and a strong position in the U.S. lithium supply chain moving forward.
All of those factors mean that Albemarle shares still have significant upside even though the name is well-known among lithium investors.
Price expectations speak for themselves. Consensus expectations are that Albemarle will trade near $320 in 12 to 18 months. Other sources put that number closer to $330 with some analysts predicting that ALB shares could rise above $480 in that timeframe.
Albemarle has had an incredible year. In Q3, company revenues increased 152%, reaching $2.1 billion. EBITDA growth was even more impressive, increasing 447% to $1.2 billion(1).
If all of that weren’t compelling enough, ALB stock also includes a modest dividend yielding 0.61%. So, while it may not have as much upside as some of the less well-known shares on this list, it’s better established and less risky.
Sociedad Quimica y Minera (SQM)
Sociedad Quimica y Minera (NYSE:SQM) stock represents a diversified chemical and mineral producer that has historically created a lot of value as a firm.
That is a strong argument in favor of investing in SQM shares while they remain somewhat muted.
Sociedad Quimica y Minera should interest investors because its lithium revenues for the first nine months of 2022 totaled $5.628 billion. That figure represented a 1064% increase on a year-over-year basis. Volumes increased 63% during the same period so it was a massive price spike that accounted for the outsized increase in revenues.
But investors should also understand that Sociedad Quimica y Minera has historically been an especially profitable and value-creating firm. It has recorded a 74.45% return on invested capital while that capital cost a mere 4.63%. The fact that the company invests in projects that provide exemplary returns makes it a value-creating firm in the extreme.
Standard Lithium (SLI)
Investing in SLI will require a bit of patience as the projects won’t be delivered until sometime in the first half of 2023. But in return, investors can buy a stock for under $4 that is expected to trade above $14 in the near future.
Standard Lithium is developing a unique method for producing lithium whereby it extracts and purifies lithium from brine.
If it is successful in bringing its projects to commercialization, it will have a massive advantage. The current process of extracting lithium from brine relies on evaporation ponds that require a months-long process.
Standard Lithium is pursuing patents for its processes which would cut the extraction process to hours rather than months. If successful, Standard Lithium could see its demand rise rapidly, making the notion that its share price can multiply entirely understandable.
On the date of publication, Alex Sirois 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.