When it comes to commodities these days, the lithium stocks are getting the least attention.
Good, I say.
It happens over and over that the most profitable investments are those that people hate.
Why is that?
Experienced investors will know what I’m about to say. But the basic reason is a hated stock is low-priced. Nobody is buying it, after all.
There may be good reason for it. Maybe the industry just isn’t useful to the world or maybe the particular company is dire.
But it could also be the company is great and the industry is about to flood the tech market (Hint: electric vehicles).
Enter lithium stocks.
So, you could take your chances buying commodities that have already entered the bull market, or you could buy lithium stocks that are still massively undervalued. Stocks with the potential to triple or even 10x their current price because they haven’t yet entered the commodities bull market.
Here are 3 lithium stocks that are best poised to go from rag to riches for early investors.
Sigma Lithium (SGML)
Sigma Lithium (NASDAQ:SGML) is a company based in Brazil which focuses on producing lithium for the electric vehicle industry. In fact, it’s a recognized world leader.
For this industry, a high purity lithium is needed to meet demands for zero carbon and zero hazardous chemicals.
One thing that makes SGML a promising stock is its tiny market cap. The smallest of all the major lithium companies at $1.4B. For comparison, Ganfeng Lithium has an $7.1B market cap. SGML currently trades at around $12.31.
So, is the low price of SGML a sign of promising upside? In my view, yes. The company issued a Final Investment Decision which gave the go ahead increase capacity by nearly 2x to 520,000 tons of concentrate.
As is the case with all lithium stocks, this isn’t a fast move to riches. SGML still has some consolidation to go through on the technical charts. It may go down a bit more before it goes up again. This is perfectly normal for an undervalued stock. The point is this is a time to get in early, or even wait it out.
Albemarle Corporation (ALB)
Albemarle Corporation (NYSE:ALB) is not solely a lithium company. They also deal in bromine and catalysts but have been the biggest lithium supplier for EV vehicles since 2020.
Like the rest of the lithium industry, ALB’s price has been in a major correction the past few years. Bad for those who bought at the top, but it makes lithium stocks a massive opportunity for those looking for undervalued stocks right now.
Is it the right time to buy now? Well, like I said about SGML, lithium stocks is a long game. You could buy now and have an undervalued stock in your portfolio, but “Lambo when?,” as they ask. Well it won’t be tomorrow or even next month.
But what makes ALB a good investment is this: the commodities market has entered the early stages of a bull run. Gold, oil and natural gas are amongst those. But lithium is yet to join the party.
ALB, of all lithium stocks, is the largest with a $11.2B market cap. In June 2024, ALB revealed new details of its lithium mining project in North Carolina. While the stock price keeps consolidating, they keep on building.
That’s a potent combo.
Ganfeng Lithium Group (GNENF)
Ganfeng Lithium Group (OTCMKTS:GNENF) is based out of China. It is the second biggest processor in the world, mainly due to China’s burgeoning EV market.
GNENF is a promising lithium stock because they sell a whole range of lithium and other related products, including lithium salts, other metals and batteries. Hence, GNENF has been labelled as the “lithium supermarket.”
In their 2023 end of year report, GNENF announced the first batch of lithium products are due to be produced by the end of 2024, with them being from their Mariana Lithium Joint-Venture Project alongside Litio Minera Argentina.
Like all lithium stocks right now, GNENF is undergoing a correction phase on the technical charts. This makes for a long and leisurely opportunity to buy into shares of the company before the lithium industry joins the rest of the commodity market’s bull-run.
As with the other lithium stocks, this is a long term opportunity. Certainly not a 10-bagger buy next month. But an exciting opportunity for the patient.
On the date of publication, Sam Farnham 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.
