The Top 5 Lithium Stocks to Buy on Weakness

Mar 09, 2023
Keyboard with hot key for e-business

Bank of America says we could see a surplus of lithium, with higher volume set to supersede slowing demand. “We see a lot of supply coming out from lithium mines … We are expecting 38% lithium supply growth this year. That’s why 2023 is likely to turn into a surplus year for lithium,” the firm told CNBC. They also see demand easing.

Even Goldman Sachs still believes we’ll see lithium over-capacity, and a slowdown in electric vehicle sales. That’s funny stuff right there.

But don’t read too much into those projections.

Over the last year, lithium prices have tripled, and could move even higher thanks to a long-term supply shortage. The increase “is largely due to increasing demand for electric vehicles and the inelastic nature of supplies,” says Alec Lucas, research analyst at Global X, as noted by CNBC. Bringing new production capacity online can take three to five years or more, “for studies, permitting, capital raising, and capital expenditure before any lithium is produced.

Plus, global demand for lithium batteries is expected to jump five-fold by 2030, according to Li-Bridge, as noted by Reuters. In fact, according to Li-Bridge, “Demand for lithium batteries in the United States is expected to grow more than six times and translate into $55 billion per year by the end of the decade, but still the country is expected to depend on imports for supply.”

Even more impressive, General Motors may pick up more lithium land. After announcing plans to invest $650 million into Lithium Americas to secure lithium supply, this may be the first of many. “Automakers are starting to realize that the only way to guarantee lithium supplies is to own or have a controlling stake in the source,” added CNBC.

Demand won’t exceed supply for quite some time.

That being the case, we’d use recent weakness as an opportunity to invest in Albemarle (ALB), Lithium Americas (LAC), Livent Corp. (LTHM), American Lithium (AMLI), and even ETFs, such as the Global X Lithium ETF (LIT).