27th May 2022
- Lithium stocks are benefiting from a surge of interest in green energy
- When quantum computing breaks through to improve lithium-ion batteries, the potential profits could be extensive.
- Top lithium stocks include companies involved in lithium mining, lithium processing, an R&D in improving lithium batteries
Lithium battery companies have set their sights on powering the world. With the global lithium-ion battery (LIB) market predicted to grow from $41.1 billion in 2021 to $116.6 billion by 2030, at a CAGR of 12.3%, many investors are giving lithium stocks a second look1
What is the attraction of lithium companies’ stock?
Lithium is energy-dense, well suited to storing excess energy and releasing it later at times of peak demand. Lithium-ion batteries, or LIBs, are seen as a way to stabilize grids and help them adapt to the fluctuations in power associated with many renewable energy sources, such as solar and wind energy2.
LIBs are increasingly appearing in a range of use cases, including electrical grids, portable devices like laptops, tablets, and smartphones, medical equipment, power tools, and most of all, electric vehicles (EVs)3.
EVs constitute a significant segment of total demand for LIB batteries4, and the growth of the lithium battery market is strongly linked to rising demand for electric vehicles. As reported by MarketsandMarkets, “electric vehicles are perceived as the future of the automobile industry and transportation systems; their increased adoption will eventually increase the demand for lithium-ion batteries.5“
Lithium stocks are riding high
The pandemic provoked a spike in demand for continuous power supply to critical infrastructures. The acceleration in digital transformation driven by COVID-19 also benefited lithium stocks, bringing a jump in automation that caused a parallel rise in demand for LIB-operated materials-handling equipment from manufacturing industries, as well as an increased adoption of smart devices.6
At the same time, lithium companies’ stock prices are riding the trend of sustainability and interest in green energy, thanks to the role they play in planet-friendly EVs and cleaner electricity grids, two of the US’ highest-polluting economic sectors7.
There are obstacles for lithium batteries to overcome before lithium ion stocks truly hit the big time. For a start, lithium batteries are expensive, although prices are dropping rapidly. Recent investment and R&D have boosted manufacturing capacity and lowered costs by approximately 80%, making them far more competitive8.
Another issue is that LIB performance drops over time. lithium companies are engaged in a fierce race to be the first to develop more efficient lithium batteries that deliver a significantly higher and more consistent power supply, and it’s even high on the to-do list for quantum computing companies.
What are the best lithium stocks to buy?
If you’re interested in finding what you consider to be the best lithium stock to buy, you have a wide range to choose from. Top lithium stocks can include companies producing lithium-ion batteries, mining and refining lithium ore, or stocks like quantum computing which are involved in R&D to produce a more sustainable and long-lasting lithium battery.
Whether you’re interested in supporting a green energy source, believe in the future of EVs, or hope to make a profit in an emerging sector, here are some lithium stocks in 2022 for investors to consider.
1. Defiance Quantum ETF (QTUM)
Strictly speaking, QTUM is not a lithium stock. It’s an exchange-traded fund (ETF) that tracks the BlueStar Quantum Computing and Machine Learning Index (BQTUM). It contains holdings in approximately 71 global companies involved in various aspects of the quantum ecosystem.
However, as mentioned above, quantum computing companies are investing a lot of effort into helping improve lithium-ion batteries, with car company Hyundai partnering with quantum computing pureplay IonQ to improve batteries for its EVs9.
The quantum computing company which is the first to deliver more sustainable and long-lasting LIBs is likely to benefit from a significant boost to its share price, and could help lift the entire sector. QTUM removes the need to predict exactly which quantum company will be the first to reach this goal, while offering exposure to the entire emerging industry, making it worth considering for those eager to invest in lithium.
2. Lithium Americas Corporation (LAC)
Lithium Americas focuses on the mining and production of lithium ore and is benefiting from the ongoing jump in demand for the mineral. Its Cauchari-Olaroz lithium brine project in Argentina is predicted to produce approximately 40,000 tons of lithium carbonate, the main raw material for lithium batteries, per annum, with a project life of 40 years. A similar project in Thacker Pass, Nevada, is expected to deliver 60,000 tons per annum for the next 46 years.
Together, the two mines are forecast to bring LAC approximately $800 million in EBITDA, once they become operational in 2023, making LAC well positioned for growth. Yahoo financial analyst Faisal Hunayun notes that LAC stock surged by close to 200% during 2021, and is believed to offer long-term potential for profits, if correctly timing purchases on price dips and accumulating a position as a potential long-term investment.10.
3. Piedmont Lithium (PLL)
Piedmont Lithium is a relatively new arrival on the lithium scene, but it’s rapidly attracting attention. It’s focusing on lithium’s capabilities as a source of clean energy, with the intention of helping companies transition to net-zero emissions.
Piedmont’s main project is the Piedmont Lithium Project in North Carolina, USA, which positions it conveniently close to production operations and customers. In January 2022, PLL released an economic impact study which predicts that its direct output impact will exceed $530 million by 2027.11
4. Albemarle Corporation (ALB)
Albemarle Corporation is a fine chemicals manufacturing company that’s involved in producing promine specialites and chemical catalysts as well as lithium. It has a solid customer base in more than 90 countries and established connections with critical industries in energy, electronics, and transportation sectors.
As well as its existing chemicals production operations, Albemarle is investing heavily in R&D for new methods of materials production, most notably through a partnership with startup 6K, which it expects will assist in creating novel lithium battery materials12.
On the financial side, Albemarle reported a rise of 33% in YOY lithium sales in Q3 2021, together with adjusted EBITDA of $123 million for the same period. These figures imply annualized adjusted EBITDA of $492 million and multi-year growth visibility, notes Hunayun, adding that it has a stable outlook and plenty of capital in reserve.13
For current performance and holdings, please visit defianceetfs.com/QTUM
1 “Global Lithium-Ion Battery Market (2021 to 2030) – Declining Prices of Lithium-Ion Batteries Presents Opportunities” July 14, 2021 https://www.prnewswire.com/news-releases/global-lithium-ion-battery-market-2021-to-2030—declining-prices-of-lithium-ion-batteries-presents-opportunities-301333864.html
2 “Global Lithium-Ion Battery Market (2021 to 2030) – Declining Prices of Lithium-Ion Batteries Presents Opportunities” July 14, 2021 https://www.prnewswire.com/news-releases/global-lithium-ion-battery-market-2021-to-2030—declining-prices-of-lithium-ion-batteries-presents-opportunities-301333864.html
3 “THE OUTLOOK FOR THE GLOBAL BATTERY MARKET” October 5, 2021 https://internationalbanker.com/brokerage/the-outlook-for-the-global-battery-market/
4 “Global Lithium-Ion Battery Market (2021 to 2030) – Declining Prices of Lithium-Ion Batteries Presents Opportunities” July 14, 2021 https://www.prnewswire.com/news-releases/global-lithium-ion-battery-market-2021-to-2030—declining-prices-of-lithium-ion-batteries-presents-opportunities-301333864.html
5 “Lithium-Ion Battery Market with COVID-19 Impact Analysis, by Type (Li-NMC, LFP, LCO, LTO, LMO, NCA), Capacity, Voltage, Industry (Consumer Electronics, Automotive, Power, Industrial), & Region (North America, Europe, APAC & RoW) – Global Forecast to 2030” June 2021 https://www.marketsandmarkets.com/Market-Reports/lithium-ion-battery-market-49714593.html
6 “Lithium-Ion Battery Market with COVID-19 Impact Analysis, by Type (Li-NMC, LFP, LCO, LTO, LMO, NCA), Capacity, Voltage, Industry (Consumer Electronics, Automotive, Power, Industrial), & Region (North America, Europe, APAC & RoW) – Global Forecast to 2030” June 2021 https://www.marketsandmarkets.com/Market-Reports/lithium-ion-battery-market-49714593.html
7 “Why lithium-ion batteries are so important” April 14, 2021 https://www.canarymedia.com/articles/why-lithium-ion-batteries-are-so-important/
8 “Opportunities and Challenges of Lithium Ion Batteries in Automotive Applications” January 29, 2021 https://pubs.acs.org/doi/10.1021/acsenergylett.0c02584#
9 “How Quantum Computers Can Make Batteries Better: Hyundai partners with IonQ to optimize lithium-air batteries” January 20, 2022 https://spectrum.ieee.org/lithium-air-battery-quantum-computing
10 “3 of the Best Lithium Stocks for 2022 to Buy Now” December 21, 2021 https://finance.yahoo.com/news/3-best-lithium-stocks-2022-110000139.html
11 “Best Lithium Stocks To Buy? 4 Names To Know” January 24, 2022 https://www.nasdaq.com/articles/best-lithium-stocks-to-buy-4-names-to-know
12 “Best Lithium Stocks To Buy? 4 Names To Know” January 24, 2022 https://www.nasdaq.com/articles/best-lithium-stocks-to-buy-4-names-to-know
13 “3 of the Best Lithium Stocks for 2022 to Buy Now” December 21, 2021 https://finance.yahoo.com/news/3-best-lithium-stocks-2022-110000139.html