3 Lithium Stocks to Power Your Portfolio in 2021
The electric vehicle (EV) space was one of the hottest industries in 2020. Despite the coronavirus outbreak, which hit most industries hard, the electric mobility sector was at risk. The outlook for the EV industry is unlikely to blossom until the coming years. What is the heart and soul of electric cars? Its batteries, of course! If you are looking to buy a green vehicle, the battery specifications should get the most attention. And what is the most important metal in EV batteries? It's lithium.
The metal is needed to develop lithium-ion batteries, the most popular batteries for electric cars. These batteries are lightweight, have high energy density, and lose less charge when not in use. One way to play the EV revolution is by buying lithium stocks. Before we move on to the lithium stocks that are worth investing in, let's take a look at the EV trends that are fueling lithium market forecast.
EV Industry On Fire: Lithium Industry Is Getting Hotter
With increasing awareness of greenhouse gases and their impact on the global climate, auto biggies are quickly switching to electric mobility, and the number of EV model launches is increasing rapidly. China, Europe, the United Kingdom, France, Germany, the United States and other countries are setting ambitious targets for phasing out gas-powered vehicles. According to Deloitte forecasts, worldwide EV sales will reach a CAGR of 29% over the next ten years. Electric vehicles are projected to account for 32% of the total new car market share by 2030, up from 2.6% in 2019.
With the increasing popularity of electric vehicles, the demand for lithium is set to skyrocket. Lithium batteries are preferred by electric car makers and used by various auto giants, including Tesla TSLA, General Motors GM, Ford F, and ToyotaTM.
While the use of lithium has traditionally been focused on ceramics, glass, lubricants, and other industrial applications, the lithium space is currently gaining the maximum attention from EV batteries. Importantly, more than 50% of all lithium produced is used in rechargeable batteries, which is expected to increase due to the widespread adoption of green vehicles. The demand for lithium for use in electric vehicles is likely to further eclipse the existing supply of this metal for traditional industrial uses such as ceramics, polymers and glass-ceramics.
Lithium outlook is brighter than ever
The way to future mobility are electric vehicles. Since lithium is the undeniable component of battery technology, the demand for the commodity is expected to grow exponentially. According to Statista data, lithium demand is expected to more than double in the next five years to 820,000 tons. The Chilean state mining authority Cochilco assumes that lithium demand will rise to 1.79 million tons per year by 2030. According to Allied Market Research, the global lithium-ion battery market was $ 36.7 billion in 2019 and is projected to reach $ 129.3 billion by 2027. with a CAGR of 18.0% from 2020 to 2027.
Say yes to these lithium players
Albemarle Corporation ALB: Albemarle, based in Charlotte, is one of the leading lithium producers with facilities for the production of battery quality lithium in Europe, Australia, China, Chile and the USA. Albemarle is strategically implementing projects to increase its global lithium derivatives capacity. It continues to focus on investing in high-return projects to increase productivity. The company is well positioned to benefit from the long-term growth of the lithium battery market. It should also benefit from synergies from the Rockwood acquisition and cost-cutting measures. Albemarle continues to strive to maintain adequate financial flexibility and liquidity. The investor-friendly measures are also encouraging. This stock of Zacks Rank # 3 (Hold) has a market capitalization of approximately $ 14 billion and long-term expected EPS growth of 11.9%. In the past year, the stock has risen by around 92%. The full list of today's Zacks # 1 Rank (Strong Buy) stocks can be found here.
Lithium Americas Corp LAC: This Canada-based small-cap lithium miner has yet to generate revenue from operations. The stock with long-term prospects should be on your radar, however. Lithium Americas is focused on advancing two major lithium projects - the Cauchari-Olaroz Lithium Brine Project in Argentina and the Thacker Pass Project (a sediment-based lithium property) in Nevada - to meet the growing global demand for lithium to satisfy. The Cauchari-Olaroz project is in the development phase. Construction is expected to be completed by the end of 2021 and production will begin in early 2022. In the meantime, all major approvals for the Thacker Pass project are expected to be in place by the end of 2025. First quarter of 2021. The company is currently reviewing financing options for the construction of the Thacker Pass. This up-and-coming market player in the lithium region is currently ranked 3rd in Zacks. Last year the share rose by more than 190%.
Piedmont Lithium Limited PLL: The Australian-based emerging lithium company currently has a Zacks Rank 3. The focus is on developing the Piedmont Lithium Project in North Carolina - one of the world's premier regions for lithium exploration. The project aims to produce 22,700 tons of battery-quality lithium hydroxide per year. Piedmont is rapidly following the development of the project to meet the requirements of the contract with Tesla. A few months ago, Piedmont signed a binding five-year purchase agreement with Tesla. The former will supply the EV giant with spodumene concentrate, a lithium mineral used to make batteries. Similar to Lithium Americas, Piedmont has not yet generated any income from the lithium business, but has recently been gaining the attention of massive investors due to promising prospects. In the past year, the stock has gained a whopping 245%.
Zack's top 10 stocks for 2021
In addition to the stocks discussed above, would you like to find out more about our top 10 tickers for the whole of 2021?
These 10 are carefully selected from over 4,000 companies that fall under the Zacks rank. They are our top buy and hold tips. Start your access to the new Zacks Top 10 stocks >>
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Ford Motor Company (F): Free Stock Research Report
Toyota Motor Corporation (TM): Free Stock Research Report
General Motors Company (GM): Free Stock Research Report
ADR (PLL) Sponsored by Piedmont Lithium Limited: Free Stock Research Report
Tesla, Inc. (TSLA): Free Stock Research Report
Albemarle Corporation (ALB): Free Stock Analysis Report
Lithium Americas Corp. (LAC): Report on Free Stock Analysis
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