Despite some recent growing pains, the global lithium market is expanding at a double-digit rate.
According to Straits Research, the market was valued at $38.2 billion in 2022 and is expected to grow to $230.4 billion by 2031, representing a compound annual growth rate of 22.1%. Demand for more sustainable vehicles and manufacturing parts has been driving that growth, although that market softened in 2024.
Rapid advances in rechargeable batteries for computers, mobile phones, electric cars and digital cameras have fueled the expansion of the lithium-ion battery market. “Rising demand for lithium batteries, lubricants, glass and ceramics, and foundry will likely drive market expansion,” Straits reports. “The rising popularity of hybrid and electric vehicles, high-drain portable devices, and energy storage systems has boosted the lithium market share.”
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Excess surplus is a primary downside issue for the lithium market. A global product surplus has sent lithium prices downward in 2024, but that trend seems to be reversing. UBS Group AG is cited in recent reports as saying the lithium market is “rebalancing” and the industry is curbing production; however, that may not last if price sentiment rises “too far, too fast.”
As the lithium market stabilizes, investors will also have a ground-floor opportunity to buy some established industry names on the cheap. These stocks (and one exchange-traded fund) fit the bill in mid-2024:
| Lithium stock/ETF | Market cap | Forward dividend yield |
| Albemarle Corp. (ticker: ALB) | $11.2 billion | 1.7% |
| Mineral Resources Ltd. (OTC: MALRY) | $7.5 billion | 1.6% |
| Arcadium Lithium PLC (ALTM) | $3.5 billion | – |
| Lithium Americas Corp. (LAC) | $580 million | – |
| Tesla Inc. (TSLA) | $593 billion | – |
| Global X Lithium & Battery Tech ETF (LIT) | $1.3 billion* | 1.3% |
*Total assets.
Albemarle Corp. (ALB)
Charlotte, North Carolina-based Albemarle is struggling in the stock market trenches. The company’s share price is down 32.8% year to date as of June 24.
Yet Albemarle still has the largest market capitalization ($11.2 billion) in the sector, which is a good ace to have up your sleeve when you’re riding out a market slump. The company also offers more product diversity than many of its rivals because it produces bromine and catalytic cracking catalysts, additives and performance catalyst solutions, among other products.
Several industry analysts agree that Albemarle is also capably positioned for the highly expected boost in lithium prices. KeyBanc recently noted that lithium prices should rise by $13,000 by 2026, to $21,000.
Additionally, Albemarle’s 1.7% dividend yield should attract income-minded investors.
Mineral Resources Ltd. (OTC: MALRY)
Mineral Resources is another lithium heavyweight that’s down for the count so far in 2024. The company’s share price is down 25.4% year to date. This Perth, Australia-based mining and processing mineral properties company will have to ride out the tough slide in lithium prices, as more than 20% of its revenue is derived from the battery-building commodity.
The company does offer a healthy 1.6% dividend yield, along with a robust partnership with Albemarle that pays Mineral $380 million to $400 million to expand its partnership in the Wodgina lithium mine in Australia to 50% from 40%, with Mineral Resources owning the remaining 50%. The mine is one of the largest known hard-rock lithium deposits in the world and has an estimated mine life of 30 years or more, giving Mineral a long runway to capitalize on the worldwide demand for lithium.
That’s going to have to be enough to get MALRY through some tough times. But if sector analysts are right and lithium prices rise in the second half of the year, investors can latch on to a proven lithium producer at a bargain price.
Arcadium Lithium PLC (ALTM)
Formerly known as Livent and now called Arcadium Lithium after Livent’s January all-stock merger with Allkem, this pure-play lithium producer may need some time to get its act together as the new partnership develops and lithium prices continue to fall.
Since the merger was completed, ALTM’s share price has suffered the same fate as other lithium producers. Year to date, the stock has fallen 55.6%, and it’s down 29.4% over the past month. Analysts see the company’s share price rebounding, though, with a consensus analyst price target of $7.13, compared with its June 24 closing price of $3.32.
Yet even in a downscale market for lithium, the Ireland-based company has a strong story to sell to investors. Its average price of $20,000 per metric ton is significantly higher than the industry average of $15,000. Additionally, the company is anticipating a 40% rise in lithium hydroxide and lithium carbonate sales in 2024, while earnings per share are up moderately.
On the downside, its spodumene segment is experiencing slow sales, and BMO Capital recently cut its target price forecast on the stock from $6 per share to $5.50 per share.
Lithium Americas Corp. (LAC)
This Vancouver, Canada-based lithium development company has placed a big bet on its major stake in Thacker Pass, one of the largest lithium resources in the U.S. Thacker Pass has a mining capacity of up to 40 metric tons of lithium per year, and the area is currently valued at about $5.7 billion, looking like a huge well of opportunity next to LAC’s current market cap of $580 million. Thacker Pass is also fully permitted and comes with a 40-year mine life, giving lithium investors a domestically qualified long-term investment when the EV market rebounds.
The company also has a deep-pocketed partner in the U.S. Department of Energy, which green-lit a $2.3 billion loan to Lithium Americas. That should be good news for investors, as it stands to reason Uncle Sam wouldn’t dig that deep if it didn’t believe the Thacker operation, which is expected to start development in 2027, will pay off.
In the meantime, frustrated company investors are playing “wait and see” because they can’t be happy about the company’s abysmal 56.9% share price decline so far in 2024. They’ll have to wait three years and hope some experts are right that Thacker is a cash-flow cow waiting to produce results.
Tesla Inc. (TSLA)
You can’t talk lithium without including the world’s No. 1 electric vehicle manufacturer. That’s where Tesla stands today, with a 51.3% share of the U.S. electric vehicle market in the first quarter of 2024. That’s significantly ahead of its closest challenger, Ford Motor Co. (F), which holds 7.4% of the market. Yet EV sales are down in 2024, which is bad news for a company that derives 81% of its revenues from electric vehicles.
Cathie Wood’s Ark Investment Management has predicted that the majority of future Tesla sales won’t come from EVs but from emerging technologies such as artificial intelligence and self-driving taxis.
The company’s share price is down 26.5% year to date, and investors will likely be concerned over Wells Fargo analyst Colin Langan’s highly publicized “sell” call on TSLA stock. Langan expects shares to fall to $120 from a closing price of $182.58 on June 24. He’s not alone; Bernstein also stamped a “sell” label on Tesla shares with a $120 price target.
With Tesla EV sales down 9% in the first quarter of 2024 on a year-to-year basis, investors may have to take a page out of Wood’s book and stop thinking about Tesla as an EV company going forward. It’s usually not a good idea to bet against company CEO Elon Musk, so reframing Tesla as an AI and self-driving vehicle powerhouse may be the way to go.
Global X Lithium & Battery Tech ETF (LIT)
If you’re gun-shy over steering portfolio cash into a defensive lithium EV market right now, you can play it safe for the moment and curb your risk with a sector investment. That’s where the Global X Lithium & Battery Tech ETF comes in.
The fund is down 22.1% year to date as of June 24, which is understandable given its overweight positions in lithium and battery companies like Albemarle, Mineral Resources and Tesla. As those companies suffer from weaker demand for electric vehicles and therefore weaker demand for lithium-powered EV batteries in 2024, so does this top sector ETF. However, most industry analysts are calling for a rebound in late 2024 and 2025.
The fund also took a hit in May after the Biden administration issued a tariff boost on $18 billion of Chinese imports. Tariff adjustments targeting China-based EVs and lithium producers tripled previous rates, putting a significant crimp in the performance of this ETF, which held a roughly 40% stake in Chinese companies at the time of the tariff change.
The LIT ETF would prosper, however, with a major lithium price rebound, as most analysts expect. LIT has a net expense ratio of 0.75% and a trailing-12-month yield of 1.3%.
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6 Best Lithium Stocks and ETFs to Buy in 2024 originally appeared on usnews.com
Update 06/25/24: This story was previously published at an earlier date and has been updated with new information.
