Lithium prices could go ballistic.
For one, there’s speculation President Biden could invoke a Cold War-era defense law this week to encourage domestic production of metals needed to make EV batteries.
In fact, according to Bloomberg, the DPA would allow the government to use a $750 million Title III fund to help increase domestic production of essential metals and minerals, such as lithium.
Two, according to Bank of America analyst, Michael Widmer, as noted by Kitco.com, lithium prices were above $40 at the start of the year, with some analysts calling for $50. All with demand for the battery metal expected to soar about 28% through 2025.
Three, according to a Yahoo Finance report, “Per the International Energy Agency, exponential growth in the EV space is likely to lead to a lithium demand surge of more than 40 times by 2030. Per a report by Mordor Intelligence, an analytics firm, the lithium market size was 280 kilotons in 2020 and is expected to grow, witnessing a CAGR of more than 10% between 2021 and 2026. Per Reuters, lithium demand is set to hit 1 million tons by 2025 and 3 million tons by 2030 from the 320,000 tons registered in 2020.”
Unfortunately, supply just can’t keep up with that demand.
So, how can investors profit from the story? Here are three ways.
Lithium Americas (LAC)
Construction activities at the company’s Caucharí-Olaroz remain on track to achieve first production by mid-2022 on the initial 40,000 tonnes per annum operation.
Analysts love the stock, too. Deutsche Bank for example upgraded the LAC stock to a buy rating, with a price target of $34. They also noted that lithium fundamentals are tightening, with lithium producers positioned to benefit from a favorable pricing environment.
Global X Lithium & Battery Tech ETF (LIT)
Or, if you’re looking for broader exposure to the lithium market, you can always pick up the Global X Lithium & Battery Tech ETF (LIT), which invests in the full lithium cycle. Some of the ETFs top holdings include Albemarle, BYD Co., Tesla, LG Chem Ltd., Livent Corporation, and dozens more, offering solid diversification among top lithium and battery tech names.
Albemarle Corp. (ALB)
ALB is another top lithium stock to consider.
There’s so much demand, Albemarle sees revenue of $6 billion to $7 billion by 2026, with $2 billion to $3 billion adjusted EBITDA. Better, the company has a massive lithium footprint all over the world, including hot spots in the U.S., Chie, Germany, Australia, and China.
