Lithium stocks can fill numerous holes in an investor’s portfolio. Not only is the spot price of lithium expected to rise substantially shortly, which gives it growth characteristics, but many lithium stocks also pay substantial dividends and have operations based outside of the United States. This combination of qualities makes lithium stocks attractive options for many investors.
Despite these broad advantages of investing in lithium stocks, some companies stand out among others. So, in this article, we’ll detail the best companies you should invest in due to their market-leading capabilities.
Albemarle (ALB)
Albemarle (NYSE:ALB) is one of those lithium stocks that every investor should know about. It’s one of the largest producers of lithium carbonate and lithium hydroxide, and its financial health and performance are sometimes used as a proxy for the lithium industry.
ALB stock reported earnings last quarter, and the results were mostly positive. However, the stock sank around 3% after the results were posted.
ALB’s standout results included steady revenue growth of about 10.5% year-over-year. Its cash and cash equivalents also increased by around 16%, and its cash-to-total liabilities ratio remains healthy.
The company intends to further diversify into new profitable operating segments, such as energy storage, which management has identified as one of its key growth areas. ALB, the market leader, is therefore one of those lithium stocks investors should watch closely.
Sociedad Química y Minera de Chile (SQM)
As the name suggests, Sociedad Química y Minera de Chile (NYSE:SQM) is a company that operates outside of the U.S., which gives investors diversification benefits.
There have also been some positive headwinds for SQM stock recently. In their third quarter, the business reported a net income of $479.4 million, with $1.68 per share earnings. Despite this, their financial performance fell short of Wall Street expectations, as analysts anticipated earnings of $1.98 per share.
This underperformance is underscored by SQM’s downward trend for its share price over the past year, losing $49.68.
However, there is a good argument that SQM is undervalued relative to its intrinsic value. For example, its P/E ratio of 4.78 and forward P/E ratio of 9.20 are relatively low compared with its peers. Then there’s also its superb efficiency in generating profits with a return on equity (ROE) of 96.70% and a return on invested capital (ROIC) of 50.68%.
SQM is one of my contrarian picks for investors who want to scoop up undervalued shares.
Ganfeng Lithium (GNENF)
Ganfeng Lithium (OTCMKTS:GNENF) is another lesser-known company in the lithium market. It produces various lithium products and has established partnerships with significant battery and EV manufacturers, such as LG Chem, Volkswagen, and others.
It’s important to note that GNENF is a penny stock whose value has dropped by a whopping 65.88% over the past year.
Still, the consensus on Wall Street is that GNENF could recover in the next twelve months. Analysts collectively estimate that its share price may grow by 26.33%, with a high of $4.73 as the predicted price target.
There could be some good reasons for Wall Street’s optimism. The company’s revenue, earnings, and profit margins have all increased substantially since 2019, reporting $20.50 billion in earnings last year.
Therefore, the trend is set for GNENF to continue performing strongly and for its stock price to catch up to its fair value estimate.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.