With electric vehicle sales disappointing against prior forecasts, it’s easy to question the narrative of lithium stocks. However, if you believe in the transformative potential of EVs – and there’s some good evidence for that – you might be attracted with the sector-wide de-risking.
According to a Fortune article, analysts projected that in 2023, U.S. sales of new EVs would rise to as many as 1.6 million units. However, that likely did not happen, with sales probably totaling no more than 1.3 million for the full year. Is that a detrimental sign for underlying lithium stocks?
Maybe not, if you consider the broader context. With consumers dealing with stubbornly high inflation along with high borrowing costs, little incentive existed to buy high-ticket items. Indeed, the rise in the personal saving rate between November 2022 to November 2023 suggests that people were holding their greenbacks.
However, if the Federal Reserve decides to cut interest rates, that could shift the narrative favorably for EVs. And whatever’s good for EVs should translate to upside for the below lithium stocks.
Sigma Lithium (SGML)
Based in Vancouver, British Columbia, Canada, Sigma Lithium (NASDAQ:SGML) is focused on powering the next generation of EVs. It seeks to accomplish this task through providing high-purity green and sustainable lithium. Analysts have high hopes for SGML, rating shares a unanimous strong buy. As well, the average price target lands at $41.73, implying nearly 74% upside potential.
Even better, Canaccord Genuity’s Katie Lachapelle sees SGML reaching a price of $48.20 per share. If so, that would come out to a return of almost 101%. Still, the challenge will be getting investors to overlook its intense volatility. Since the beginning of January, the security gave up nearly 21% of equity value, hardly the auspicious start stakeholders were looking for.
That said, Sigma’s Greentech plant purports to utilize renewable energy, recycled water, and dry-stack tailings, thus minimizing environmental impact. With the political and ideological winds favoring various green initiatives, this attribute could help swing the needle for SGML. Thus, it’s worth consideration for millionaire maker lithium stocks.
Lithium Americas (LAC)
A possible candidate for millionaire maker lithium stocks, Lithium Americas (NYSE:LAC) is a resource and materials company focused on advancing lithium projects in Argentina into production, according to its website. Of course, Argentina is a major player in the production of the metal, supplying about 6% of the world’s lithium. Overall, Latin America contributes about 35% of global lithium supplies.
According to investment data aggregator Gurufocus, Lithium Americas features one positive sign regarding its financials and no warnings. On the surface, that seems incredibly encouraging. However, I’d be remiss not to point out that LAC is largely a narrative play. That’s because the enterprise doesn’t lever an extensive operating history. So, let the buyer beware.
At the same time, Wall Street analysts are very bullish on LAC, pegging shares a consensus strong buy. Overall, the average price target lands at $11.51, implying upside potential almost 154%. Further, Jefferies delivers the high-side target of $19, implying almost 319% growth. Thus, LAC ranks among the lithium stocks to watch for speculation.
Piedmont Lithium (PLL)
A highly speculative idea, Piedmont Lithium (NASDAQ:PLL) seemingly offers an attractive storyline. Per its website, Piedmont focuses its operations on the renowned Carolina Tin Spodumene Belt of North Carolina. That’s the cradle of the lithium industry. As a result, the company could be positioned favorably in a geopolitical sense. Notably, China controls over half of the world’s lithium refining capacity (but must rely on imports for raw materials).
Still, investors shouldn’t just dive into PLL for one very good reason: it’s risky as all heck. In the past 52 weeks, shares stumbled nearly 73%. And since the beginning of this year, PLL cratered almost 36%. Without any discernible evidence that the freefall will slow anytime soon, market participants would be taking shots in the dark.
Interestingly, though, a major player sold 1,026 contracts of the PLL Feb 16 ’24 24.00 Put earlier this month, which possibly implies modest optimism. Also, analysts rate shares a strong buy with a $59.67 price target, implying a 233% upside potential. It could be one of the millionaire makers of lithium stocks but again, it’s wildly risky.
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.
