As a key battery metal, lithium is critical in electric vehicles and energy storage devices and is an important part of the global transition to green energy.
Lithium is also the most efficient and cost-effective option for high-performance batteries. Analysts estimate that global lithium production will increase to 1.17 million tonnes in 2024, up from 737,000 tonnes in 2022 and 964,000 tonnes in 2023, to meet the huge demand growth.
Meanwhile, despite the sharp decline in lithium prices from their highs, the fact remains that the super cycle belonging to the metal for electric vehicles may not have begun yet, and demand for the metal for electric vehicles could soar over the next decade if the world continues to move towards the electrification of vehicles. Analysts predict that the peak of accelerating EV sales (in terms of the number of units sold) should start now and continue until 2035.
Some analysts predict that the bottom in lithium prices could come at the end of the first quarter of 2024 or in the second quarter of 2024, creating a great opportunity to buy lithium-related stocks.
Lithium Americas (TSX:LAC) is one of the best lithium stocks to consider. The company’s stock price has soared over the past five years alone, fuelled by the Thacker Pass lithium project in Argentina and Nevada, which is now one of the largest lithium deposits in North America.
Some investors may think that Lithium Americas stock has underperformed, but that’s because the company recently underwent a split, which has impacted the stock’s price action. In fact, the stock has quadrupled in price over the past five years. The bottom line is that this momentum is likely to continue.
Lithium Americas has the advantage over its peers of a diversified portfolio, with projects in both Argentina and the United States. The company also recently secured a $2bn investment from General Motors, cementing its financial position. So while the stock is currently down, the company is likely to see a huge turnaround over the next decade.
If Lithium Americas is a big name lithium mining stock, Avalon Advanced Materials (TSX:AVL) is not well known to investors. It’s a small-cap penny stock, which means the share price can be more volatile than other lithium stocks, while the upside potential is huge.
The company’s share price has risen 700 per cent over the past five years. The company also offers additional investment opportunities in Argentina and the U.S. through its Separation Rapids project in Ontario. The project is currently touted as one of the most advanced lithium projects in Canada, with a clear prospect for production.
In addition, Avalon has established relationships with well-known lithium mining companies. So while smaller than Lithium Americas, this lithium stock has its own strength. If it can be purchased and held alongside Lithium Americas stock, it will provide additional lithium investment opportunities throughout North America.
