Crisis will again lead to opportunity for lithium stocks. Sure, crumbling demand for electric vehicles, fears of oversupply, and stalling lithium demand in China have put a recent dent in lithium prices, but don’t let that chase you away.
Instead, use the weakness as an opportunity to buy. After all, according to Morningstar, “Rising EV adoption and the increasing build-out of energy storage systems will keep lithium demand growing to surpass 1 million metric tons in 2024, from 800,000 in 2022, eventually hitting 2.5 million metric tons by 2030. While we see rising supply, we think enough projects will face delays to keep a market deficit as demand grows.”
That being said, investors should consider using weakness in lithium stocks as an opportunity.
Albemarle (ALB)
Albemarle (NYSE:ALB) is ridiculously oversold at $114.60. Not only is it over-extended on RSI, MACD, and Williams’ %R, it now sits at lows not seen since late 2020.
In fact, at $114.60, ALB has now given up all of its gains it racked up between late December 2021 to November 2022. UBS recently downgraded the ALB stock to neutral, with a $140 price target. Even Morgan Stanley cut its price target to $90 from $155. But again, use this weakness as an opportunity, especially with a good deal of weakness now priced in.
Also, while the company cut its 2023 outlook on weak lithium prices, its sales are expected to grow about 30% this year. That’s not bad considering how much lithium prices fell. Plus, while we wait for ALB to recover, we can collect its current yield of 1.4%.
Livent Corp. (LTHM)
Or, look at Livent (NYSE:LTHM). Since topping out around $29, LTHM plummeted to $14.24. For one, it’s also over-extended on RSI, MACD, and Williams’ %R, and hasn’t been this low since late 2020 either. Two, after missing on earnings, and lowered 2023 guidance, it looks like a good deal of negativity has been priced in here.
Also, according to LTHM management, it still expects to see “significantly improved performance versus 2022.”
American Lithium (AMLI)
Another one stuck in overkill-land is American Lithium (NASDAQ:AMLI).
After testing double-top resistance around $3.75, AMLI slumped to double-bottom support at $1.08. From here, I’d like to see it retest $3.75 once lithium prices recover again.
Helping, the company just increased its lithium resource estimate at its Peru deposit. As noted by Seeking Alpha, “The company said its measured and indicated resource jumped 476% from the previous 2019 estimate to 5.53M metric tons of lithium carbonate equivalent, which it said may support long production potential at Falchani.”
That, according to CEO Simon Clarke now makes Falchani “one of the largest hard rock lithium projects globally with the ability to produce high purity battery grade lithium carbonate.”
Sigma Lithium (SGML)
Severely undervalued, the pullback is Sigma Lithium (NASDAQ:SGML) is also overdone.
As I noted on Oct. 30, “Sigma Lithium also just announced it achieved record peak production of 890 tonnes of chemical-grade lithium concentrate at its Greentech plant. And it just said its Phase 2 and 3 expansion plans are proceeding as planned.”
We’ll get a better idea of what’s happening at Sigma Lithium when it posts earnings on Nov. 14. It’ll hold an investor conference on the morning of Nov. 15.
Amplify Lithium & Battery Technology ETF (BATT)
Exchange-traded funds (ETFs) were severely beaten down, too. Look at the Amplify Lithium & Battery Technology ETF (NYSEARCA:BATT), for example.
After rallying to a high of about $19.50 in 2021, BATT plunged to a recent low of $9.96, which, to be honest, is overkill. With an expense ratio of 0.59%, the BATT ETF provides exposure to global companies deriving material revenue from developing, producing, and using lithium battery technology. I’d use weakness as an opportunity in BATT, too.
Eventually, it will make its way back to $19.50.
Global X Lithium & Battery Tech ETF (LIT)
Or, look at the Global X Lithium & Battery Tech ETF (NYSEARCA:LIT).
After hitting a high of about $95, LIT is now down to $47.72, and is just as oversold. From its current price, I’d like to see it initially retest prior resistance around $60.
With an expense ratio of 0.75%, the LIT 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. (OTCMKTS:TTDKY), BYD Co. (OTCMKTS:BYDDF), Tesla, Livent Corp., Piedmont Lithium (NASDAQ:PLL), and Standard Lithium (NYSEMKT:SLI).
Standard Lithium (SLI)
Standard Lithium’s (SLI) chart has been just as pitiful, but don’t write it off. It’s also technically oversold at support dating back to early 2021. It’s over-extended on RSI, MACD, and Williams’ %R, too. From its current price of $2.65, I’d like to see SLI initially refill its bearish gap around $4.50 with a good deal of negativity priced into the stock.
Fueling potential upside, the company just claimed the highest-ever North American brine grade of 806 mg/L at its Smackover project. “With a new confirmed lithium analysis of 806 mg/L and an average grade of 644 mg/L in our drilled area, we believe that we have identified a globally significant lithium brine asset,” President and COO Andy Robinson said.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.