3 Stocks You Need to Watch for the Lithium Boom

April 4, 2023
By The Investing Insider Staff

We're about to plunge into a sparking topic today, and it's none other than the lithium sector.

Are you thinking, "Isn't lithium just the stuff in batteries?" Well, you're not wrong! But there's a lot more to this electrifying narrative than meets the eye. So, let's jump right in!

Why should lithium matter to you as an investor? Let's join the dots. Have you noticed the increasing presence of electric vehicles (EVs) on our roads? From the stylish Tesla range to GM's pledge to go entirely electric, the automobile industry is transitioning faster than a professional racing driver. And what's powering these EVs? You guessed it - lithium-ion batteries.

However, the story doesn't end with automobiles. Lithium-ion batteries are indispensable for renewable energy storage, such as wind and solar power. Not to mention, they power everything from your smartphone to your laptop. As our world becomes more digital and environmentally conscious, lithium is emerging as a hot commodity.

A report from Global Market Insights suggests that the lithium-ion battery market could reach a staggering $255 billion by 2032. That's a lucrative opportunity for savvy investors. So, how can you grab a slice of this lithium pie? Here are some noteworthy lithium stocks that deserve your attention:

1) Albemarle Corporation (ALB)

In the lithium landscape, Albemarle is a significant player. As one of the largest lithium producers globally, they have the scale and know-how to ride this rising tide. If you're contemplating an entry into the lithium market, Albemarle could be your ideal starting point.

In FY 2022, Albemarle Corporation (ALB) reported impressive financial results. Revenue surged 120% YoY to $7.32 billion, spurred by robust demand for the company's lithium products. Compared to FY2021, operating income rose nearly 4x to $2.57 billion, and net income increased an astonishing 22 times!

Several factors have contributed to Albemarle's strong financial performance, such as:

  • Rising demand for lithium products, fuelled by the expanding electric vehicle market.
  • Successful implementation of the company's strategic initiatives, including ramping up lithium production capacity and investing in new technologies.
  • Continuous global expansion of the company.

2) SQM (Sociedad Quimica y Minera) (SQM)

Hailing from Chile, SQM is another heavyweight in the lithium industry. With substantial lithium reserves and a supportive government, they're sitting on a lithium treasure trove. As the EV revolution gains momentum, SQM is well-positioned to reap the benefits.

SQM witnessed a prosperous year in 2022, with revenue, operating income, and net income all witnessing substantial increases. The company's robust performance was driven by high demand for its lithium and other specialty products, fuelled by the booming electric vehicle market. SQM is poised for continued growth, benefiting from this trend and investing in innovative technologies to outpace the competition.

Key details about SQM's financial performance in 2022 (compared to FY 2021) include:

  • Revenue increased nearly 4-fold YoY to $10.71 billion.
  • Operating income rose 5-fold to $5.58 billion.
  • Net income escalated 6-fold to $3.91 billion.

3) EnerSys (ENS)

While EnerSys isn't a lithium miner, they're a crucial player in the lithium battery industry. They provide stored energy solutions and could be a smart pick if you're looking to diversify your investments.

In 2022, EnerSys posted strong financial results. Revenue increased 11% year-over-year to $3.6 billion, propelled by growth across the company's three business segments: motive power, backup power, and specialty.

Several factors have contributed to EnerSys' impressive financial performance, such as:

  • Persistent high demand for the company's products.
  • Successful implementation of the company's strategic initiatives.
  • Continuous expansion of the company's global reach.

EnerSys is poised for ongoing growth. The company is benefiting from robust demand across its core markets.

However, before you get carried away and funnel all your funds into lithium stocks, remember the cardinal rule of investing: diversification. All investments come with inherent risks, and the lithium sector is no exception. Always conduct thorough research or consult a financial advisor before making any significant investment decisions.

The lithium sector is at a fascinating crossroads, touching upon major trends like green energy, technological advancement, and shifts in global policies. As we stride towards a more sustainable future, lithium and its key players could be primed for a significant windfall. Therefore, as an investor, this is a sector you'll want to monitor closely. Until our next financial deep-dive, stay savvy and stay diversified!

-Investing Insider Staff
This article is informational purposes only and is not investment advice.  See full disclaimer here
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