There is a palpable energy coursing through the lithium market, a sense of excitement as prices surge to new heights. With the lithium carbonate CIF North Asia price reaching $14,600 on May 7th – its highest point in nearly four months – investors are eyeing the potential for growth in this sector. The price surge, with notable players like Arcadium Lithium (NYSE:ALTM) commanding prices exceeding $20,000 per metric ton, signals a market ripe for strategic investments. As pundits predict a stabilization in lithium prices, a 15% surge in 2024 – the strongest since December – bolsters confidence in the market. The looming demand for lithium energy-storage batteries as electricity consumption escalates is a factor that should not be understated.
For astute investors looking to capitalize on these favorable market dynamics, here are three standout cheap lithium stocks to consider.
Arcadium Lithium (ALTM)
Ireland-based Arcadium Lithium, sculpted from the merger of Livent and Allkem, has reported an average Q1 price surpassing $20,000 per metric ton – a significant premium over the industry standard of $15,000 per metric ton. CEO Paul Graves noted a stabilization of lithium prices at levels considerably higher than in previous downturns.
Despite a dip in net income from $115 million in Q1 2023 to almost $20 million, the company’s earnings per share stood at 6 cents, outpacing the average analyst estimate of 4 cents. The stock has surged by over 24% in the last month, coupled with a low Enterprise Value/EBITDA ratio of 10.4 times – making Arcadium Lithium a compelling option among the roster of cheap lithium stocks.
Sociedad Quimica y Minera (SQM)
Chile’s Sociedad Quimica y Minera (NYSE:SQM), a prominent lithium miner, is strategically positioned to leverage the resurgence in lithium prices. Recent boosts in the company’s rating to “buy” by investment bank Jefferies, along with an increased price target – reflecting confidence in SQM’s low production costs and global expansion maneuvers – attest to its potential.
With an exclusive agreement to supply lithium to BYD (OTCMKTS:BYDDF), the premier EV and plug-in hybrid seller globally in 2023, SQM stock has gained over 6% in the past month, signaling an upward trajectory. Additionally, the shares trade at an attractive forward price-earnings ratio of 12.6 times.
Albemarle (ALB)
Albemarle (NYSE:ALB) is positioned for potential growth, with analysts projecting earnings per share potentially exceeding $8 in 2025. At a forward price/earnings ratio of 15 times (should 2025 EPS hit $8.50), ALB stock is considered favorably valued.
Forecasts from Keybanc hint at a significant surge in lithium prices to $21,000 – or higher in case of shortages – by 2026, attributed to escalating EV demand. Albemarle’s substantial lithium extraction volume places it in a lucrative position to capitalize on rising lithium prices.
Bank of America’s recent upgrade of ALB to a “buy” rating from “neutral,” supported by the belief that lithium prices are nearing their floor, adds further credence to the bullish outlook. Projections from the most bullish analysts even envision ALB shares hitting $190, a substantial leap from $131.