by Ian Cooper
Lithium stocks were destroyed over the last few weeks.
However, it looks like the pullback is overdone.
For one, according to SQM, it’s “confident that the boom in electric vehicle (EV) sales will be a crucial driver of global demand for the soft white metal. Electric vehicle sales worldwide are expected to rise by around 30% this year, while lithium demand will increase 20%, the company forecast in its 1H23 results report,” as noted by CNAmericas.com.
Two, Albemarle expects to see higher lithium prices and supply tightness. In fact, on its second-quarter earnings call, CEO J. Kent Masters said, “Customers are returning to the spot market after destocking to unsustainably low levels of inventory against the backdrop of growing demand, with lithium inventories decreasing in the supply chain over the last few months.”
Three, according to a Seeking Alpha article, “Supply constraints may also be a major driver for pricing… Lithium production from existing mines is expected to flat after 2025, while the contributions from new mines are also minimal, as the sector remains under-invested.”
That being said, investors may want to push back into oversold lithium stocks, such as:
ALB has become ridiculously oversold at major support. It’s also over-extended on RSI, MACD, and Williams’ %R at the moment. From its current price of $189.74, we’d like to see the stock initially rally back to $213 a share.
Helping, ALB just raised its full-year guidance. It now expects to see net sales growth of about 40% to 55% and adjusted EBITDA to improve another 10% to 25% from 2022. Analysts like the ALB stock here, too, with RBC Capital, Bank of America, Mizuho and Credit Suisse all raising their price targets.
Lithium Americas (LAC)
Lithium Americas is also oversold at lows it hasn’t seen for quite some time. It’s also over-extended on RSI, MACD, and Williams’ %R. Eventually we’d like to see it bounce back to $21.50 initially. Longer-term, we’d like to see it test $32 again.
It’s still making progress with its Thacker Pass mine, which General Motors recently invested $650 million. LAC is also expected to make its first delivery in late 2026, which could fuel healthy revenue streams. And, it just got shareholder approval to split into two companies.
That includes its North American and Argentinian business units. Lithium Argentina, for example, will focus on the company’s 44.8% interest in Caucharí-Olaroz, its 100%-owned Pastos Grandes project and its interest in the Sal de la Puna. Meanwhile, Lithium Americas will focus on its Thacker Pass lithium project in Humboldt County, Nevada.
Global X Lithium & Battery Tech ETF (LIT)
Or, if you just want to make things easier, diversify, and spend less, take a look at the Global X Lithium & Battery Tech ETF (LIT). With an expense ratio of 0.75%, the ETF invests in the complete lithium cycle. Everything from mining and refining the metal through battery production. Some of its top holdings include Albemarle, TDK Corp., Panasonic, BYD Co., Tesla, Livent Corp., Piedmont Lithium and Standard Lithium.