Lithium stocks once captured the attention of investors globally as the demand for lithium-ion batteries soared, driven by the burgeoning electric vehicle market and renewable energy sector. A primary component in rechargeable battery production in electric cars, portable electronics and energy storage solutions, lithium is sometimes called “white gold.”
But major market enthusiasm for lithium cooled as supply/demand curves inverted amid wider EV avoidance and less raw capital moving into massive renewable energy products. But both headwinds may be shifting as supply overages correct themselves and demand begins picking up. These three lithium stocks stand to gain from that global realignment — and it isn’t too late to buy.
Albemarle (ALB)
Albemarle (NYSE:ALB), the world’s largest lithium producer by market capitalization and output, has had a tough few months, trending downward ever since a 2023 Bank of America downgrade for the lithium stock and the broader industry citing economic principles. Still, the large lithium stock’s per-share price suppression may just open an ideal opportunity for investment.
According to bearish analysts analysts, as supply chains stabilize, the current excess of lithium ready for shipment will surpass demand. Additionally, Chinese lithium buyers reportedly hold a surplus, dampening immediate demand. These factors suggest that Albemarle’s short-term volatility may continue, but not for long. As of mid-2023, lithium producers collectively anticipated a global undersupply of lithium, expecting that demand would exceed supply by over 500,000 tons by 2030, driven by the booming tech market.
Still, it isn’t 2030 yet and Albemarle’s recent earnings report was muted, though not disastrous. Sales beat expectations though earnings slipped due to lower spot pricing — all in all, the report showed a company biding its time for better conditions.
Lithium Americas (LAAC)
Lithium Americas (NYSE:LAAC) may be one of the cheapest lithium stocks, but it’s also one of the lithium stocks facing the strongest potential momentum despite the current sluggish lithium market. As markets point toward an eventual reversal in 2024, this Argentinian-focused mining stock could see significant gains. The demand for lithium, driven by its essential role in batteries and renewable energy, is expected to increase by more than 30% annually through 2030.
In 2023, like its industry peers, Lithium Americas faced slow demand and significant oversupply, which drove down spot prices. However, demand is now picking up, and some analysts anticipate an impending undersupply, which could push spot prices higher, benefiting Lithium Americas.
Better yet for the lithium stock’s prospects, Argentina’s new president is pounding the table to encourage interest in the region’s lithium mining and aiming to lower operational barriers. His recent discussions with Elon Musk underscore the strategic importance of lithium for EV production and Argentina’s geostrategic position as a major lithium supplier. Trading below its book value and at a lower price-to-forward earnings ratio than in previous years, Lithium Americas is the top lithium stock for maximum gains.
Enovix (ENVX)
On the battery side of the lithium stocks spectrum, small-cap lithium stock Enovix (NASDAQ:ENVX) is a small-cap stock revolutionizing battery technology. Unlike major battery producers like Tesla (NASDAQ:TSLA), which recently shifted their lithium-ion batteries away from rare earth materials while maintaining the same fundamental design, Enovix is rethinking the entire battery structure.
The company produces 3D silicone lithium-ion batteries, designed for scalability and suited for high-capacity applications such as smartphones and tech wearables. Enovix demonstrated its innovative approach with two significant achievements in 2023. The FDA approved its batteries’ usage in vital sign monitors, which track metrics like blood pressure and heart rate. Additionally, Enovix secured a substantial contract with the U.S. Army to incorporate its batteries into advanced military wearables, updating soldiers’ equipment with cutting-edge technology.
Although Enovix focuses mostly on research and development today, these milestones indicate the company’s rapid market expansion could quickly catalyze as it commercializes its battery solutions and paves the way for lithium batteries’ industrial future.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.