Lithium stocks are facing a challenging 2023, as the global metal supply exceeds the demand from electric vehicle and battery manufacturers. This surplus is leading to a sharp decline in lithium prices, which has hurt the profitability and growth prospects of many lithium producers.
However, some companies are managing to maintain their competitive edge. They are cleverly diversifying revenue streams, expanding production capacity, and improving operational efficiency.
Microsoft Bing’s AI CoPilot predicts three lithium stocks with potential to deliver 300% returns by 2030.
Albermarle Corporation (ALB)
One standout is Albemarle Corporation (NYSE:ALB), the world’s largest lithium producer boasts a diversified portfolio of lithium assets.
It includes brine operations in Chile and Argentina, hard rock mines in Australia, and joint ventures in China and the U.S. Also, the company produces bromine and catalysts. This provides stable cash flows and helps offset the volatility in the lithium market.
ALB generated over $7 billion in revenue last year due to elevated lithium prices. In 2023, the lithium producer continues to deliver stellar results with two quarterly earnings beats. Unfortunately, markets haven’t been kind to ALB shares. The lithium producer’s stock price has fallen more than 41% since the start of the year. This is attributed to pessimistic investor sentiment about the direction of lithium prices.
Given where the stock is trading now, it is quite possible ALB could be oversold, especially if lithium prices start to rebound. Albemarle’s valuation is only sitting at 7.8x forward earnings, so potential investors should be interested.
Livent Corporation (LTHM)
Another attention-worthy lithium stock is Livent Corporation (NYSE:LTHM), a leading producer of high-purity lithium hydroxide, a key ingredient for high-performance batteries.
Livent has a strong customer base, including long-term contracts with Tesla, BMW, LG Chem, and Panasonic. Not only do these provide stable, predictable revenue but also access to the fast-growing EV market.
In recent years, Livent has been expanding its production capacity in Argentina, where it operates one of the largest and richest brine resources in the world. Another burgeoning spot lies within China, where it expects the Zhejiang facility to double its production capacity in the country. Last year, similar to Albemarle, Livent saw record year-over-year (YOY) revenue growth. As lithium prices have ebbed away from their 2022 rally, Livent’s skyrocketing revenue growth has all but dissipated in 2023.
Still, the lithium producer’s stock trades relatively cheap at a forward P/E ratio of 7.8. As EVs become preferred by consumers, Livent’s role in providing lithium will be valued more. Thus, investors should buy in as soon as possible before Livent’s cheap share rebound.
Lithium Americas (LAC)
Lithium Americas (NYSE:LAC) has been a developer of two large-scale lithium projects, Cauchari-Olaroz in Argentina and Thacker Pass in Nevada. And in July, LAC announced a spin-off of the Argentine assets Cauchari-Olaroz.
This new entity, Lithium Americas (Argentina) (NYSE:LAAC) will own Lithium Americas’ interests in Argentina. In addition, it will enable the lithium producer to focus on the Thacker Pass lithium site.
The Thacker project already has tremendous potential, with 16.1 million tons of battery-grade lithium carbonate equivalent (LCE) available for extraction. Moreover, the project has received a $650 million investment from General Motors (NYSE:GM). This reinforcement solidifies the project’s future role in supplying battery materials to power electric vehicles.
Though LAC is still pre-revenue, the company predicts the Thacker Pass project will generate $1.2 billion in annual EBITDA. And that will more than justify LAC’s current enterprise value, which sits at nearly $869 million.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.