Lithium Prices Bottom Out, Strategic Opportunity for US Lithium Stocks Emerges

Strategic Opportunity for US Lithium Stocks
Published on: Jun 18, 2024

As lithium prices start to bottom out and electric vehicle sales accelerate, the time for strategic allocation of quality US lithium stocks seems to have arrived. The drive for carbon neutrality is boosting demand for lithium resources, while the rise of global nationalism is increasing volatility in the international lithium market.

According to Statista, global lithium demand may reach 3.8 million tons by 2035, a significant increase from over 1 million tons this year. The International Energy Agency (IEA) predicts that, based on current electric vehicle and battery storage trends, lithium demand could surge 13 times by 2040, with demand in the electric vehicle sector alone increasing 43 times.

Lithium prices are also expected to rise with demand.

Canaccord Genuity predicts a rebound in lithium prices by July. Canaccord is now more confident that lithium prices have bottomed out compared to the end of May, citing recent declines in lithium carbonate production costs from several producers. Additionally, Lithium Royalty Corp. (TSX: LIRC) (OTCMKTS: LITRF) indicated in its latest financial report that lithium prices appear to have bottomed out this quarter. Driven by growth in China, demand signals continue to strengthen, with the market price of spodumene rising about 25% from the lows of January and February this year.

The strategic and long-term investment value of lithium has also caught the attention of investment guru Warren Buffett. In June, Buffett’s Berkshire Hathaway announced the formation of a joint venture with Occidental Petroleum (NYSE: OXY) focused on lithium resource extraction.

Here are some US lithium stocks suitable for contrarian investors to buy and hold long-term:

**1: Albemarle** Lithium industry giant Albemarle (NYSE: ALB) has seen its stock price drop more than 24% in the past month and over 55% in the past year to around $100, indicating it is significantly undervalued. Technical indicators such as RSI and MACD also show the stock is oversold. While waiting for the stock price to rebound, investors can receive a dividend of 40 cents per share (paid on July 1).

**2: SQM** The stock price of lithium producer Sociedad Quimica y Minera de Chile SA (NYSE: SQM) has dropped 12.5% in the past month and over 41% in the past year to $42, technically oversold with a current dividend yield of 4.95%. Moreover, CEO Ricardo Ramos remains optimistic about the lithium market’s future, noting that strong demand growth since the beginning of the year will continue throughout the year. Despite unimpressive financial results, the company has still raised its lithium sales guidance.

**3: American Lithium** The stock price of American Lithium Corp (NASDAQ: AMLI) has fallen nearly 24% in the past month and over 73% in the past year to $0.58. Key catalysts for the stock include the preliminary economic assessment (PEA) of the Tonopah project in Nevada and the lithium discovery in Peru. Recently, the company increased the estimated value of its Falchani lithium project in Peru by two-fold to $5.11 billion, with a potential operation lifespan of 32 years. Including the TLC lithium project in Canada, the combined after-tax net present value (NPV) of these two projects is approximately $8.37 billion.

**4: Piedmont Lithium** The stock price of Piedmont Lithium Limited (NASDAQ: PLL) has dropped over 32% in the past month and nearly 83% in the past year to $10.67. The biggest catalyst for this stock is the Carolina Lithium project in North Carolina. The project has received mining permits, which will help expedite financing, sales, and technical support, potentially making it one of the world’s lowest-cost and most sustainable producers of lithium hydroxide and spodumene concentrate.

Electric Cars Energy Metals Lithium Warren Buffett