Boom Goes Electric Vehicle Stocks

Ian Cooper
Ian Cooper
Cooper was among the few analysts to spot the financial crisis of 2008, the top of subprime and Alt-A, the death of Lehman Brothers, Bear Stearns, and New Century Financial, and even the Dow’s collapse to 6,500, as well as its recovery. He even called for gold to rally well above $1.500 when it traded under $600.

 

Electric vehicle stocks are booming just as gas prices are ticking higher.

You’ve watched shares of Tesla (NASDAQ: TSLA) rocket from a low of $100 to $1,228 over the last year.

Even companies like Nio (NIO) ran from about $5 to $42 in recent months.

The move from fossil fuels to electric vehicles has accelerated.

Helping, governments all around the world want millions of EVs on the roads. Major auto companies, like General Motors (NYSE: GM) are investing $35 billion in EVs through 2035.  Even the latest infrastructure bill includes funding for electric vehicles.

In fact, according to UtilityDive.com, “The EV-related proposals include more than $100 billion in tax credits that could knock up to $12,500 off the sticker price of a new electric car or truck, depending on where and how it is produced.”

Unfortunately, there’s just a problem that could put the brakes on growth.

Lithium – a key material in lithium-ion batteries – is in short supply.

“There is the quadrupling of demand in just five years and probably a growth of six or seven times over 10 years. So, clearly, the industry is not prepared today for that level of demand – the amount of incremental capacity that the industry needs over the next 10 years is at least 1.5 million mt and in terms of capital investment, will probably require $45 billion-$50 billion of investment into new projects or expansions of existing operations,” said iLi Markets partner Daniel Jimenez, as quoted by S&P Global Platts.

With short supply and growing demand, lithium prices may only push higher.

Here’s a look at 3 lithium stocks that are benefiting.

 

Albemarle (NYSE: ALB)

Albemarle, one of the world’s biggest producers of lithium has been incredibly explosive. Since bottoming out around $48 in early 2020, the stock ran to a recent high of $272.51. However, the run may be far from over, with lithium demand outweighing supply.

There’s so much demand, Albemarle sees revenue of $6 billion to $7 billion by 2026, with $2 billion to $3 billion adjusted EBITDA. Better, the company has a massive lithium footprint all over the world, including hot spots in the U.S., Chile, Germany, Australia, and China.

Even more impressive, “Albemarle delivered another strong quarter, generating $195 million in adjusted EBITDA, driven by continued strength in demand for our Lithium and Bromine products,” said Albemarle CEO Kent Masters. “We are in the final stages of two lithium projects which are expected to double our nameplate capacity to about 175,000 metric tons, including La Negra III/IV where construction is complete and commissioning is progressing.”

Lithium Americas (NYSE: LAC)

Lithium Americas has been just as explosive.

Since bottoming out around $13, the LAC stock is now up to $32.67 and could push to higher highs. At the moment, the company is developing the Thacker Pass lithium. Mined in Nevada, where it’s expected to begin construction in early 2022.

“In 2018, Lithium Americas completed a pre-feasibility study (PFS) on a two-phase project with a production capacity designed to reach 60,000 tpa of battery-quality lithium carbonate (Li2CO3) and 46-year mine life. A feasibility study (FS) for Phase 1 is expected by the end of 2021,” as noted on the company’s website.

In addition, its Caucharí-Olaroz mine is still on track to achieve the first production by mid-2022 on the initial 40,000 tonnes per annum operation.

Lithium Americas also made a $400 million bid for Argentina-based lithium company, Millennial Lithium. All with Argentina expected to produce as much lithium as Chile by the end of the decade. China is also bidding for the same property.

 

Livent Corporation (NYSE: LTHM)

Livent is a pure-play lithium producer that’s also running on surging demand.

Since bottoming out around $17, the stock climbed to a recent high of $31.33.

“The strong growth in lithium demand that we saw in the first half of 2021 shows no signs of abating.  Published and contracted prices for lithium in all forms pushed even higher in the third quarter, driven by multiple factors,” said Paul Graves, president and CEO of Livent.

In addition, the company is still on track to deliver capacity expansions, with the 5,000 metric ton hydroxide addition in Bessemer City and initial lithium carbonate expansion of 10,000 metric tons in Argentina expected to reach commercial production by the third quarter of 2022.

Even better, the company just guided higher. It now expects to see full-year 2021 revenue of $390 million to $410 million, as compared to prior guidance of $370 million to $390 million. It also expects to see full-year 2021 adjusted EBITDA of $62 million to $72 million, as compared to initial estimates of $55 million to $70 million.

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