3 Lithium Stocks to Power Your Portfolio in 2021

The electric vehicle (EV) space has been one of the hottest industries in 2020. Despite the coronavirus outbreak that hit most of the industries hard, the e-mobility sector has been on a tear. The EV industry prospects are only expected to blossom in the coming years. So, what is the heart and soul of electric cars? Of course, its battery packs! If you are looking to buy a green vehicle, it’s the battery specs that should command most of your attention. And what is the most important metal in EV batteries? It is lithium.

The metal is required for the development of lithium-ion batteries, the most sought-after batteries to power electric cars. These batteries are light weight, boast high energy density and are less likely to lose charge when not being used. One of the ways to play the EV revolution is to buy lithium stocks. Before we move on to the lithium stocks that should be worth investing in, let us take a look at the EV trends that are fuelling the lithium market projections.

EV Industry on Fire: Lithium Industry to Get Hotter

With rising awareness about greenhouse gases and their effect on global climate, auto biggies are fast shifting gears to e-mobility and the number of EV model launches is rapidly increasing. China, Europe, United Kingdom, France, Germany, the United States and other countries are laying out ambitious targets to phase out gas-powered vehicles. Per Deloitte projections, worldwide EV sales are set to see a CAGR of 29% over the next decade. EVs are likely to account for 32% of the total market share for new cars by 2030, indicating a jump from 2.6% in 2019.

Amid rising popularity of EVs, the demand for lithium is likely to skyrocket. Lithium batteries are preferred by electric car manufacturers and used by various auto giants including Tesla TSLA, General Motors GM, Ford F and Toyota TM.

While the use of lithium was traditionally concentrated in ceramics, glass, lubricants and other industrial uses, the lithium space is presently gaining the maximum attention from EV batteries. Importantly, more than 50% of all the lithium produced is deployed in rechargeable batteries, which is expected to increase on the back of widespread adoption of green vehicles. The demand for lithium for usage in EVs is likely to further dwarf the existing supply of this metal for traditional industrial purposes including ceramics, polymers and glass ceramics.

Lithium Prospects Rosier Than Ever

The road to future mobility is EVs. With lithium being the indisputable ingredient in the battery technology, the demand for the commodity is expected to grow exponentially. Per Statista data, lithium demand is expected to more than double to 820,000 tons over the next five years. Chile's state mining agency, Cochilco, projects lithium demand to increase to 1.79 million tons per year by 2030. According to Allied Market Research, the global Lithium-ion battery market was valued $36.7 billion in 2019 and is projected to hit $129.3 billion by 2027, at a CAGR of 18.0% from 2020 to 2027.

Say Yay to These Lithium Players

Albemarle Corporation ALB: Charlotte-based Albemarleis one of the leading producers of lithium, with battery-grade lithium-producing plants in Europe, Australia, China, Chile and the United States. Albemarle is strategically executing projects aimed at boosting its global lithium derivative capacity. It remains focused on investing in high-return projects to drive productivity. The company is well placed to gain from long-term growth in the battery-grade lithium market. It should also gain from synergies from the Rockwood acquisition and cost-cut actions. Albemarle remains committed to maintain adequate financial flexibility and ample liquidity. Its investor-friendly moves are also encouraging. This Zacks Rank #3 (Hold) stock has a market cap of around $14 billion and long-term expected EPS growth of 11.9%. Over the past year, the stock has surged around 92%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lithium Americas Corp LAC: ThisCanada-based small cap lithium miner is yet to generate revenues from operations. However, the stock — boasting long-term prospects — should be on your radar. Lithium Americas is focused on advancing two significant lithium projects — the Cauchari-Olaroz lithium brine project in Argentina and Thacker Pass project (a sedimentary-based lithium property) in Nevada — to address the rising global demand for lithium. The Cauchari-Olaroz project is in the development phase, with construction expected to be completed by 2021-end and production to be commenced in early 2022. Meanwhile, all major permits associated with the Thacker Pass project are likely to be received by the end of first-quarter 2021.The firm is exploring finance options for the Thacker Pass’ construction. This emerging entrant in the lithium space currently carries a Zacks Rank #3. Over the past year, the stock has rallied more than 190%.

Piedmont Lithium Limited PLL: This Australia-based emerging lithium company currently carries a Zacks Rank #3. It is focused on the development of the Piedmont Lithium Project, located in North Carolina — one of the top-notch regions in the world for lithium exploration. The project targets a production of 22,700 tons/year of battery grade lithium hydroxide. Piedmont is fast tracking the development of the project in order to cater to the requirements of the deal with Tesla. A few months back, Piedmont entered into a five-year binding sales agreement with Tesla. Per the deal, the former will supply the EV behemoth with spodumene concentrate, a lithium mineral, which is used in the production of batteries. Similar to Lithium Americas, Piedmont has not generated revenues from the lithium business yet, but is gaining massive investors’ attention of late due to promising prospects. Over the past year, the stock has gained a whopping 245%.

Zacks Top 10 Stocks for 2021

In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?

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Ford Motor Company (F) : Free Stock Analysis Report
 
Toyota Motor Corporation (TM) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Piedmont Lithium Limited Sponsored ADR (PLL) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Albemarle Corporation (ALB) : Free Stock Analysis Report
 
Lithium Americas Corp. (LAC) : Free Stock Analysis Report
 
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