In this article, we will be taking a look at 11 cheap lithium stocks to buy according to analysts.
Metals, minerals, and other resources have long held an important place in the global economy and, subsequently, in the financial markets. Since these commodities have managed to stay in demand, the companies dealing with their exploration, provision, and processing have also stayed relevant. Lithium is one such metal that has quickly become an important resource to businesses and consumers across the globe because of several reasons. Some might argue the most important reason is the metal’s use in rechargeable batteries for mobile phones, laptops, cameras, and perhaps most importantly, electric vehicles (EVs).
Environmental Awareness: A Benefit To The Lithium Industry
With climate change and global warming on the rise, corporations and governments across the globe have implemented green programs and solutions in their operations. The emission of harmful gases from traditional cars has rapidly become an issue of pandemic proportions, leading to rising demand for environmentally friendly alternatives in the form of EVs. As a result, companies operating in this space, such as Tesla, Inc. (NASDAQ:TSLA), Rivian Automotive Inc. (NASDAQ:RIVN), and Albemarle Corporation (NYSE:ALB) have managed to reap the benefits of this demand. However, without lithium batteries, most of these companies would be left in the dust, a fact that makes the importance of this commodity more apparent than ever before.
With rising demand, lithium companies are trying to increase the extraction of the chemical while minimizing the adverse environmental impacts of this process. According to CNBC this June, automakers have been setting ambitious EV targets that they have been struggling to meet. As such, lithium companies like Lilac Solutions have set about trying to resolve their issues. Dave Snydacker, the founder and CEO of Lilac Solutions, made the following comment on this matter:
“The auto industry requires a 20x increase in lithium supply and there’s just no way to achieve that type of growth with conventional technologies.”
New Technologies Take The Stage
Because of this, companies in the industry are now using a new technology known as direct lithium extraction, which promises to increase the efficiency of lithium extraction while minimizing negative risks associated with older methods. This method is also projected to increase lithium production from 54,000 metric tons in 2023 to 647,500 metric tons by 2032, according to Benchmark Mineral Intelligence. This amount is forecasted to be worth almost $21.6 billion at that point.
Direct lithium extraction represents a significant growth opportunity for many lithium companies across the globe today, especially with the demand for EVs and lithium batteries being steadily on the rise. Governments like the US government have also been pushing for more EV production under proposals such as those put forth by the US Environmental Protection Agency, which forecasts US automakers to produce 60% more EVs by 2030 and 67% more by 2032 to meet EV production requirements, according to Reuters this April. Considering the above, we have compiled a list of some cheap lithium stocks to buy today, according to analysts. In light of current developments within the industry, these are lithium stocks that could explode in the near future and include lithium penny stocks as well, for investors looking to buy into this investment opportunity at barely any cost.
Photo by Kumpan Electric on Unsplash
Our Methodology
To select the stocks for our list, we went through the top holdings of the Global X Lithium & Battery Tech ETF. We shortlisted 11 stocks from these holdings based on which stocks had the highest upside potential based on average analyst price targets, using data from TipRanks. We then ranked these stocks based on their upside potential, from the lowest to the highest. We also used Insider Monkey’s hedge fund data from the first quarter to show their popularity among hedge funds this year.
Cheap Lithium Stocks To Buy According To Analysts
11. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 41
Upside Potential: 11.37%
Average Analyst Price Target: $259.72
Albemarle Corporation is a specialty chemicals company. It is based in Charlotte, North Carolina. The company operates through its Lithium, Bromine, and Catalysts segments. The Lithium segment provides lithium compounds like lithium carbonate, lithium hydroxide, and lithium chloride, among more.
As of July 18, Michael Sison at Wells Fargo maintains an Overweight rating on shares of Albemarle Corporation. The analyst also raised his price target on the stock from $250 to $270.
There were 41 hedge funds holding stakes in Albemarle Corporation in the first quarter. Their total stake value in the company was $355 million.
Holding 1,300 shares in the company, Beech Hill Partners was the largest shareholder in Albemarle Corporation at the end of the first quarter.
10. Sociedad Quimica y Minera (NYSE:SQM)
Number of Hedge Fund Holders: 20
Upside Potential: 11.98%
Average Analyst Price Target: $89.20
Citadel Investment Group held the most shares in Sociedad Quimica y Minera (NYSE:SQM) at the end of the first quarter, amounting to 1.5 million shares.
Santhosh Seshadri, an analyst at HSBC, maintains a Buy rating on shares of Sociedad Quimica y Minera as of July 6. The analyst also holds a price target of $90.50 on the stock.
Sociedad Quimica y Minera is a fertilizers and agricultural chemicals company based in Santiago de Chile, Chile. The company’s products include specialty plant nutrients, iodine derivatives, lithium derivatives, potassium chloride and sulfate, industrial chemicals, and more.
We saw 20 hedge funds holding stakes in Sociedad Quimica y Minera in the first quarter, with a total stake value of $310 million.
Like Tesla, Inc., Rivian Automotive Inc., and Albemarle Corporation, Sociedad Quimica y Minera is a lithium stock many hedge funds are piling up on today.
9. EnerSys (NYSE:ENS)
Number of Hedge Fund Holders: 23
Upside Potential: 13.04%
Average Analyst Price Target: $127
On July 14, Michael Gallo at CL King initiated coverage on shares of EnerSys (NYSE:ENS) with a Buy rating. The analyst also announced a price target of $137 on the stock.
EnerSys is an electrical components and equipment company. It offers stored energy solutions for industrial applications across the glove. Its products also include lithium batteries which are used in mobile defibrillators, X-ray machines, and more. The company is based in Reading, Pennsylvania.
A total of 23 hedge funds were long EnerSys at the end of the first quarter. Their total stake value in the company was $329 million.
Vulcan Value Partners mentioned EnerSys in its fourth-quarter 2022 investor letter:
“EnerSys (NYSE:ENS) is a global leader in stored energy solutions for industrial applications. It supplies motive power batteries for trucks and forklifts, specialty batteries for satellites and military equipment, battery chargers, power converters and distributors, and outdoor equipment enclosures, amongst many other products and systems. Over the past three years, the business faced COVID-19 lockdowns, inflationary cost increases, and restricted access to the critical product components needed for its more complex, higher return products. On its most recent quarterly earnings call, management was confident the business had finally worked past many of these issues and expressed optimism that costs were beginning to level off, supply chain issues were easing, and EnerSys could resume converting its backlog into revenue. The stock price responded favorably to the quarterly results and management’s comments, and we continue to see plenty of opportunity for sequential improvement ahead.”
8. Livent Corporation (NYSE:LTHM)
Number of Hedge Fund Holders: 32
Upside Potential: 13.46%
Average Analyst Price Target: $32.15
In the first quarter, 32 hedge funds were long Livent Corporation (NYSE:LTHM). Their total stake value was $162 million.
Livent Corporation is another specialty chemicals company on our list. It is based in Philadelphia, Pennsylvania. The company manufactures and sells lithium compounds mainly used in lithium-based batteries, specialty polymers, and chemical synthesis applications across the globe.
An Overweight rating was maintained on shares of Livent Corporation by Aleksey Yefremov, an analyst at Keybanc, on July 11. The analyst also raised his firm’s price target on the stock from $32 to $35.
Citadel Investment Group was the most prominent shareholder in Livent Corporation at the end of the first quarter, holding 91.3 million shares in the company.
Carillon Tower Advisers said the following about Livent Corporation in its fourth-quarter 2022 investor letter:
“Livent Corporation (NYSE:LTHM) is a pure-play, fully integrated producer of performance lithium compounds. The stock underperformed amid investor concerns about how a potential decelerating rate of growth in overall electric vehicle (EV) production and demand, primarily in China, would affect the future price of lithium. Despite these potential near-term headwinds, longer-term the global lithium market remains tight, and we believe Livent plays a critical role in the battery value chain and remains well- positioned for the overall continued global adoption of EVs.”
7. BYD Company Limited (OTCMKTS:BYDDF)
Number of Hedge Fund Holders: 2
Upside Potential: 16.92%
Average Analyst Price Target: $40
BYD Company Limited (OTCMKTS:BYDDF) is an automobile manufacturing company based in Shenzhen, China. The company operates through its Secondary Rechargeable Batteries and Photovoltaic, Mobile Phone Components, Assembly and Other Products segments. The first segment manufactures lithium-ion and nickel batteries for sale, among more.
BYD Company Limited was spotted in the portfolios of two hedge funds during the first quarter, with a total stake value of $15.4 million.
6. Lucid Group Inc. (NASDAQ:LCID)
Number of Hedge Fund Holders: 16
Upside Potential: 19.26%
Average Analyst Price Target: $8.67
Cantor Fitzgerald analyst Andres Sheppard reiterated an Overweight rating on shares of Lucid Group Inc. (NASDAQ:LCID) on July 13. The analyst also maintains a price target of $10 on the stock.
Lucid Group Inc. was seen in the 13F holdings of 16 hedge funds at the end of the first quarter. Their total stake value in the company was $21.7 million.
Lucid Group Inc. is another automobile manufacturer that has made it to our list. The company is based in Newark, California. It supplies electric vehicles (EVs) with lithium-ion batteries, among more.
Like Tesla, Inc., Rivian Automotive Inc., and Albemarle Corporation, Lucid Group Inc. is a lithium stock that is highly popular among elite hedge funds this year.
5. Sigma Lithium Corporation (NASDAQ:SGML)
Number of Hedge Fund Holders: 14
Upside Potential: 33.41%
Average Analyst Price Target: $50.31
Sigma Lithium Corporation (NASDAQ:SGML) is a diversified metals and mining company. It is engaged in the exploration and development of lithium deposits in Brazil.
There were 14 hedge funds long Sigma Lithium Corporation in the first quarter, with a total stake value of $60.9 million.
4. FREYR Battery SA (NYSE:FREY)
Number of Hedge Fund Holders: 20
Upside Potential: 51.79%
Average Analyst Price Target: $12.50
On June 29, Adam Jonas at Morgan Stanley upgraded FREYR Battery SA (NYSE:FREY) shares from Equal Weight to Overweight, alongside placing a $10 price target on the stock.
FREYR Battery SA is an electrical components and equipment company. It designs and manufactures lithium-ion-based battery cell facilities.
FREYR Battery SA had 20 hedge funds long its stock in the first quarter, with a total stake value of $176.2 million.
3. Lithium Americas Corp. (NYSE:LAC)
Number of Hedge Fund Holders: 14
Upside Potential: 54.20%
Average Analyst Price Target: $32.52
A total of 14 hedge funds were long Lithium Americas Corp. (NYSE:LAC) in the first quarter. Their total stake value was $47.8 million.
Lithium Americas Corp. is a diversified metals and mining company. It explores for lithium deposits.
Massif Capital made the following comment about Lithium Americas Corp. in its first-quarter 2023 investor letter:
“During the first quarter, Lithium Americas Corp. (NYSE:LAC) had several positive events, including a favorable record of decision ruling for Thacker Pass, paving the way for construction of the mine to start, a revised Thacker resource/cost estimates, and GM’s financing/offtake agreement. Even though LAC is non-producing and its stock is down 34% over the past year (compared to the larger lithium producer’s 3%), the stock remains one of our favorites with multiple catalysts (and still up roughly 600% from our initial purchase price):
- Cauchari-Olaroz Stage I first production in sight and Stage II initiation by year-end,
- Substantial earthworks beginning 2H23 at Thacker,
- Growth potential with greater guidance on Pastos Grandes, and
- Formal separation of North American Assets and Argentine assets into separate publicly traded entities
As Cauchari-Olaroz in Argentina and Thacker Pass come online, volumes will effectively be marked at leading-edge pricing. As such, it seems prudent to continue underwriting growth, especially given the firm’s experienced management team with a visible pipeline to incremental supply before 2025. These qualities make one or both post-separation entities attractive buyout targets for numerous suitors…” (Please click here to read the full text)
2. Sayona Mining Ltd. (ASX:SYA)
Number of Hedge Fund Holders: N/A
Upside Potential: 76.43%
Average Analyst Price Target: $0.21
Sayona Mining Ltd. (ASX:SYA) is another diversified metals and mining company on our list, based in Brisbane, Australia.
The company engages in mineral identification, acquisition, exploration, and development in Australia and Canada. Sayona Mining Ltd. explores for lithium, graphite, and gold deposits.
1. Enovix Corporation (NASDAQ:ENVX)
Number of Hedge Fund Holders: 24
Upside Potential: 90.88%
Average Analyst Price Target: $41
In total, 24 hedge funds held stakes in Enovix Corporation (NASDAQ:ENVX) in the first quarter, with a total stake value of $225.6 million.
Enovix Corporation is a designer and developer of lithium-ion batteries. It is based in Fremont, California.
EF Hutton analyst Chip Moore assumed a Buy rating on Enovix Corporation shares on July 5, alongside a $21 price target.
Here’s what Long Cast Advisers, LLC said about Enovix Corporation in its fourth-quarter 2022 investor letter:
“Enovix Corporation (NASDAQ:ENVX) is what I’ll endearingly call a “shitco” meaning it’s pre-revenue / pre-profit but with a massive addressable market, so if it succeeds, the potential reward offsets the risks. I think there’s room in the portfolio for a few smaller investments like this, but if I am consistently wrong over time, I’ll change course (SNES and SANW also fall into this category, and so far I’ve been wrong about those, but like ENVX, they are small positions with long time horizons).
ENVX makes lithium batteries using silicon instead of graphene as the anode. Silicon as an anode offers many benefits – faster charging, longer charge periods and longer battery life – but it has a major drawback in that it swells when it charges, and this causes battery degradation and mechanical failure…” (Click here to read the full text)
See also 12 Best Lithium and Battery Stocks to Buy and 10 Most Profitable Lithium Stocks Now.
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- 11 Best Lithium Stocks To Buy Now
- Lithium Reserves by Country
- 10 Undervalued Lithium Stocks to Buy Now
This article is originally published at Insider Monkey.
