5 Best Lithium Stocks to Buy in July 2021

The soaring demand for electric vehicles and the global pivot towards electric cars is having an impact on the metals and mining industry also. Higher sales of electric vehicles are also boosting the demand for commodities like nickel, copper, cobalt, and lithium.

Electric vehicle companies have been scrambling to secure the supplies of these minerals especially cobalt which is mainly mined in The Democratic Republic of the Congo. Lithium is also a key component of batteries. Lithium prices weakened in 2020 amid a supply glut. However, in the medium to long term, prices and demand for lithium should go up looking at the trajectory of electric vehicle sales. Here are the five best lithium stocks that you can buy in July 2021.

1. Lithium Americas Corp (NYSE: LAC)

LAC stock is up only about 3% in 2021 and is now down over 51% from its 52-week highs. The company is focusing on advancing the Cauchari-Olaroz project in Argentina and Thacker Pass project in the US. The company won a reprieve when a US federal judge ruled that it could do excavation work at its Thacker Pass lithium mine.

Earlier this month, LAC announced a $4.8 million investment into Arena Minerals. “The strategic ownership in Arena Minerals will provide Lithium Americas future optionality to advance exploration in Argentina in proximity to the Caucharí-Olaroz lithium project (“Caucharí-Olaroz”), which is being jointly developed by the Company and Ganfeng Lithium Co. Ltd. (“Ganfeng”),” it said in its release.

Technical and fundamental analysis

Lithium Americas stock is trading below the 50-day, 100-day, and 200-day SMA. The stock has failed to breach these trendlines which is a bearish indicator. The 14-day RSI (relative strength index) is meanwhile neutral at 49.3x and indicated neither overbought nor oversold positions.

The company is currently posting losses so we don’t have earnings-based valuations. It, however, trades at an NTM (next-12 months) EV-to-sales multiple of 56.4x which is below the 5-year average of 76x. The company could benefit from the Biden administration’s efforts to scale up the production of crucial minerals in the country.

Analysts are also bullish on LAC stock and it has five buy and two hold ratings. The stock’s median target price of $22 implies an upside potential of 57.9% over the next 12 months.

67% of all retail investor accounts lose money when trading CFDs with this provider

2. Albemarle Corporation (NYSE: ALB)

Albemarle stock is up almost 28% in 2021 and is outperforming the broader markets. The company is not a pure-play lithium company but a specialty chemicals company and produces Lithium, Bromine, and Catalyst solutions. Unlike some of the pure-play lithium companies that are posting losses, ALB is profitable and also pays a dividend.

ALB stock currently trades at an NTM PE multiple of 51.2x which is the highest in its history. The stock has seen a rerating amid the positive outlook for lithium miners. It’s looking good on the charts also and trades above the 50-day, 100-day, and 200-day SMA.

Wall Street analysts have a mixed opinion over the stock and it has 12 buys, nine hold, and four sell ratings. Its median target price of $177.50 is a 6% discount over current prices.

67% of all retail investor accounts lose money when trading CFDs with this provider

3. Piedmont Lithium (NYSE: PLL)

Piedmont Lithium is developing an integrated lithium business in Carolina. Since the project is in the development phase, the company is not making any revenues and analysts expect the company to report revenues only in 2022. The stock is up almost 78% so far in 2021 and analysts see it running even higher.

Wall Street analysts are unanimously bullish on the stock and all eight analysts covering it have rated it as a buy or some equivalent. The stock has a median target price of $85.50 which is a premium of 67% over current prices. The stock’s lowest target price of $81 implies an upside of 59% while the highest target price of $95 is a premium of 86%.

PLL looks like a good play on the lithium industry and the mine should hit production at a time when the demand for the battery mineral is expected to be high.

67% of all retail investor accounts lose money when trading CFDs with this provider

4. Sociedad Quimica Y Minera De Chile (NYSE: SQM)

SQM stock is trading with a year-to-date loss of 5.6%. It is also a profitable company and has a dividend yield of 0.54%. It produces plant nutrients, iodine, lithium, and industrial chemicals. The company is the largest lithium producer globally which makes it an attractive play. The company’s topline is expected to grow at a fast pace and analysts expect revenue growth of 24.2% in 2021 and 20.2% in 2022. The stock trades at an NTM PE multiple of 31.2x.

Looking at the technical indicators, the stock has found strong support at the 50-day SMA but trades below the 200-day SMA. Meanwhile, Wall Street analysts are mixed on the stock and its median target price of $56.10 implies an upside of 19% over current prices. Its lowest target price is $35.5 which is a discount of over 25% while the highest target price of $70 is a premium of 48% over current prices.

Of the 19 analysts polled by CNN Business, 6 rate SQM stock as a buy while four rate it as a hold. Two analysts have a sell or equivalent rating on the stock.

67% of all retail investor accounts lose money when trading CFDs with this provider

5. Tesla (NYSE: TSLA)

If you are bullish on the lithium industry due to the increasing adoption of electric cars, Tesla could also be a stock worth looking at. While the company is not a lithium producer, it is at the forefront of the electric vehicle revolution. The Elon Musk-run company delivered almost half a million cars in 2020 and sales are expected to grow at a CAGR of 50% in the medium term.

Tesla is the most popular name in the green energy industry. While its core automotive operations get all the attention, the company also has solar and energy storage operations. So far, these businesses don’t account much for Tesla’s revenues but the company’s CEO Elon Musk believes that the energy business will be eventually as big as the automotive business.

While not a pure-play lithium stock, it could be a proxy way to play the theme as higher sales of Tesla cars would also mean higher lithium demand.

67% of all retail investor accounts lose money when trading CFDs with this provider