While seemingly everyone these days loves waxing poetic about the future of transportation being electric, investors may be better off acquiring top lithium stocks rather than chasing individual electric vehicle brands. It comes down to the simple concept of selling tickets to the game rather than betting on which team will win the contest.
Sure, you’re likely going to accrue much higher gains betting on a winning EV brand. However, the chances of any kind of success likely favor the best lithium stocks to buy pre-breakout. After all, what unites all EV manufacturers is their need for the underlying commodity. Secure access to supply for lithium and you effectively control much of the future.
Even better, the enormous demand for the metal not just from EVs but other product categories gives high-growth lithium stocks a significant tailwind. Back in 2021, the global lithium mining market reached a valuation of $343.22 million. Currently, experts in the field project that this segment will exceed the $1 billion mark by 2025, a substantial upgrade from prior forecasts.
Therefore, it may pay to consider the below top 7 lithium stocks.
Sociedad Quimica y Minera (SQM)
A frequently mentioned name for top lithium stocks, Sociedad Quimica y Minera (NYSE:SQM) still enjoys broad analyst support. Presently, SQM carries a consensus moderate buy view, breaking down into three buys, one hold, and one sell. Overall, the experts’ average price target lands at $88.48, implying nearly 19% upside potential.
Still, prospective investors of lithium stocks with high potential will want to keep their wits about them. In the trailing one-year period, for example, SQM slipped over 23%. On a financial note, investment data aggregator Gurufocus warns its readers that the mining firm could be a value trap. It’s possible that investors take a dim view of the company’s massive forward yield of 12.14%.
Backed by a payout ratio of 129.21%, it wouldn’t be surprising if management trimmed the dividend. If so, SQM might take a beating. On the positive side, SQM does enjoy a solid balance sheet. It’s also a consistently profitable enterprise. Therefore, for those with extra pocket change, SQM could be one of the best lithium stocks to buy pre-breakout.
Albemarle (ALB)
Another well-known and established enterprise among the top lithium stocks, Albemarle (NYSE:ALB) continues to attract analyst interest. Right now, the experts peg ALB as a consensus moderate buy. This assessment breaks down into 14 buys, three holds, and one sell. Overall, their average price target hits $259.72, implying nearly 24% upside potential.
As with Sociedad Quimica y Minera above, Albemarle pinged Gurufocus’ radar as a possible value trap. For some investors, ALB might be too good to be true. For example, ALB trades at a trailing earnings multiple of 6.74. In contrast, the sector median stat comes in at 20X, meaning that ALB ranks supposedly favorably below 89.3% of its peers.
On the positive front, Albemarle is consistently profitable, year in and year out. Also, it’s worth pointing out that on a per-share basis, the company enjoys a three-year EBITDA growth rate of 45.7%. This stat rates above 88.65% of companies listed in the chemicals industry. Thus, it’s one of the high-growth lithium stocks to consider.
Livent (LTHM)
Headquartered in Philadelphia, Pennsylvania, Livent (NYSE:LTHM) offers an exciting entity among top lithium stocks. Since the beginning of this year, LTHM gained over 35% of its market value. Analysts appreciate Livent, pegging it a consensus moderate buy. This assessment breaks down as seven buys and three holds. On average, the experts believe shares will hit $32.94, implying over 28% upside potential.
Looking at LTHM as a whole, it’s probably one of the most attractive lithium stocks with high potential. No, it doesn’t carry the biggest upside potential among expert ratings. However, Livent features decent stability in the balance sheet. As well, it features a strong three-year revenue growth rate (per-share basis) of 15%. And its trailing-year net margin impresses at 36.3%.
Also, even with its solid performance stats – such as a three-year EBITDA growth rate of almost 50% – it’s undervalued. In particular, LTHM trades at a forward multiple of 12.16. As a discount to projected earnings, Livent ranks better than 64.47% of its peers.
Sigma Lithium (SGML)
Based in Vancouver, British Columbia, Canada, Sigma Lithium (NASDAQ:SGML) is one of the highflyers among top lithium stocks. Since the Jan. opener, SGML gained 47% of its equity value. In the trailing one-year period, shares returned over 127%. Unsurprisingly, shares carry a moderate buy consensus view. The average price target lands at $50.35, implying 35% growth.
To be sure, while Sigma Lithium may be more exciting than other ideas among the best lithium stocks to buy pre-breakout, you’re paying for that risk. For example, SGML trades at a forward multiple of 49.39. In contrast, the sector median stat sits at 12.18X, meaning that Sigma ranks worse than 89.18% of companies listed in the metals and mining sector.
Also, another point to bring up is that Sigma is an aspirational enterprise. And by that, I mean that it’s pre-revenue. In other words, you’re taking a massive risk that the company will make good on its promises. However, if it does, watch out!
Lithium Americas (LAC)
Also based in Vancouver, B.C., Lithium Americas (NYSE:LAC) isn’t quite the highflyer that its compatriot is. For example, since the beginning of this year, LAC gained a bit more than 9%. That’s not bad but that’s not great either. And in the trailing one-year period, LAC slipped almost 19%. Still, something could be cooking, possibly making LAC one of the top lithium stocks for speculators.
For instance, analysts have high hopes for LAC. Presently, it carries a consensus moderate buy view. But the enthusiasm goes above your normal moderate buys with an average price target of $35.89, implying nearly 84% upside potential.
Unfortunately, Lithium Americas carries similar vulnerabilities to Sigma Lithium. For one thing, LAC trades at a red-hot premium; specifically 97.4x forward earnings. Also, LAC trades at 7.59X projected free cash flow, worse than nearly 89% of the competition.
If that wasn’t enough, we’re talking about a company that hasn’t generated revenue in a long time. Still, if LAC makes good on the narrative, it could be one of the high-growth lithium stocks to buy.
Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) is in the process of proving the economic mineral recovery of lithium in North Carolina. An exciting idea among top lithium stocks for speculators, PLL gained nearly 27% of its equity value since the beginning of this year. In the trailing one-year period, PLL moved up almost 32%.
Given the underlying chart mobility, it’s no surprise that Piedmont carries broad bullish support among Wall Street analysts. Within the past three months, PLL carries a moderate buy consensus view. Moreover, the average price target clocks in at $100.50, implying over 85% upside potential.
To be sure, the financials present significant risks. For example, I’m having a hard time buying into the forward price-earnings ratio of 0.06X. At the same time, PLL trades at a tangible book multiple of 3.14x, ranking worse than 75.63% of peers. However, Piedmont does enjoy solid stability in the balance sheet. Also, its three-year EBITDA growth rate comes in at 30.1%, above 74% of its rivals. Thus, it’s a solid entry for the top 7 lithium stocks for speculators.
Standard Lithium (SLI)
Another Vancouver-based idea for top lithium stocks, Standard Lithium (NYSEAMERICAN:SLI) is one of the largest brine processing facilities in North America. So far this year, it’s a fast-moving asset, with SLI gaining over 56% of equity value since the Jan. opener. To be fair, though, SLI slipped 20% in the past 365 days. For contrarians, this framework might suggest some room to run.
Within the past three months, no analyst covers SLI. However, within the past year, three experts have covered SLI, all of them rating it a buy. Not only that, the average price target among the three experts stands at $10.07. Based on the closing price of $4.44 on July 26, we’re talking about an upside potential of nearly 127%.
For full disclosure, prospective investors will be paying heavily for their risky venture. For example, SLI trades at a tangible book multiple of 6.08x. In contrast, the sector median stat is only 1.5x. On the other hand, Standard Lithium does enjoy some stability in the balance sheet. If you want to roll the dice, SLI could be one of the lithium stocks with high potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.