In this Article
- Sociedad Quimica y Minera de Chile (NYSE: SQM)
- Albemarle (NYSE: ALB)
- Lithium Americas (NYSE: LAC)
- Livent (NYSE: LTHM)
- Ganfeng Lithium (OTC: GNEN.F)
Whether you’re an ESG investor looking at renewable energy or a thematic investor following the global uptick in demand for renewable materials, lithium stocks have likely piqued your attention. There are more than a few options for lithium stocks to buy, which begs the question: which companies are best-positioned to give investors market-beating ROI?
If you’re considering which lithium stocks to buy in 2022, take the time to evaluate each company’s fundamentals, as well as its role in this high-demand market. Are you interested in companies that perform extraction? Midstream refinement organizations? Integrated lithium pure-play companies? It’s worth understanding what’s out there before diving into this market.
Below, you’ll find a list of the five most promising lithium stocks to buy right now, encompassing all aspects of the market. While they all take a different approach to generating profit, they all have one thing in common: lithium.
5. Sociedad Quimica y Minera de Chile (NYSE: SQM)
The world’s largest producer of lithium products is a no-brainer on this list. Not only does the world’s growing demand for lithium products solidify SQM’s spot among lithium stocks to buy right now, its financials are more than enough to justify a case for both short- and long-term investors.
The quarterly earnings growth for Sociedad Quimica y Minera de Chile is through the roof, registering 979.50% as of its latest earnings report. This is due in large part to its quarterly sales growth, which ticked up 282.20%. With an operating margin of 44.50% and sales of $4.35 billion, this company has firmly entrenched itself as one of the best lithium investments out there. Best of all? It’s price-to-earnings growth (PEG) is an attractive 0.54, with reasonable valuation across similar metrics.
4. Albemarle (NYSE: ALB)
Another of the world’s largest lithium suppliers, Albemarle is an attractive investment in this booming niche. The company’s five-year EPS outlook of 46.14% is attractive given the current economic climate, and it’s backed up by healthy sales growth of 36%. A low debt load and a very healthy operating margin of 26.50% open the company up to long-term stability: something more and more appealing to investors today.
The only real knock against Albemarle is an astronomical P/E of 102.25 and a PEG of 2.22. The company appears overvalued at its current share price, which can make it a tough position to open for those seeking value in the lithium space. Nonetheless, it’s an industry leader with very few direct competitors.
3. Lithium Americas (NYSE: LAC)
Lithium Americas has been on an upward trajectory since 2020 and shows no signs of slowing. The company peaked at nearly $40 per share in early April 2022, but has since retracted to the mid-$20 area, which is actually a good thing for serious investors. At current levels LAC is much more reasonably valued (though still on the high side).
Lithium Americas is currently laying the groundwork to become a big-time player in the lithium space, with operations in both North and South America. Its balance sheet might not look all that impressive today; however, it has an EPS outlook of more than 350% in the year ahead! While that’s an ambitious target for a company that has yet to post profitability, it’s not far off. Investors looking to roll the dice on a long-term lithium play will want to take a second look at LAC.
2. Livent (NYSE: LTHM)
Spun off from FMC (NYSE: FMC) in 2018 to create a lithium pure-play business, Livent is a very attractive player in the space right now. It’s one of the top lithium stocks to buy and one with a long runway ahead of it. The company is already profitable, reporting $54.6 million in income on $472.2 million in sales. Its sales are also on the rise, growing 56.50% over the last quarter. Low debt load makes it an even more attractive long-term play.
As is the case with other lithium stocks, Livent is wildly overvalued at current levels. It has a P/E of 112.38 and, more alarmingly, a PEG of 112.38. Its P/C is also at 70.04, signaling to investors that they’re paying a significant premium. Nevertheless, a share price below $30 is attractive enough to consider a starter position.
1. Ganfeng Lithium (OTC: GNEN.F)
Many investors are hesitant to invest in Chinese companies due to concerns about transparency and the looming threat of geopolitical tensions. That said, it’s difficult to find a more attractive lithium stock to buy than China’s largest lithium producer: Ganfeng Lithium. The company has done nothing but outperform, and its financials hold up to scrutiny.
In its most recent earnings report, Ganfeng Lithium posted $5.37 billion in revenue, resulting in more than $3.5 billion in net income: a 640% year-over-year increase. This is thanks to a 65% profit margin. The company’s five-year trendline paints a picture of the world’s growing dependence on lithium and this company’s ability to supply it to major buyers like Tesla (NASDAQ: TSLA). It’s one of the top companies in the world and a top lithium stock to buy and hold long-term.
Future Prospects of Best Lithium Stocks to Buy
Demand for raw materials is on the rise across virtually every sector, and lithium is a frontrunner in terms of viable applications and accompanying demand. The future is bright for lithium, and even brighter for the companies capable of supplying it to manufacturers. Take a closer look at any of the five companies above when it comes to investing in lithium for the long-term.
Want more information about the materials market and the role of metals like lithium in thematic investing trends? Check out the best investment newsletters and subscribe to any that pique your curiosity when it comes to following market demand. Today, lithium is the hot-ticket item; make sure you know what’s next.
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