The Top Lithium Stocks to Watch in 2017
All investors know about the disastrous performance of raw materials over the past few years. The strengthening of the U.S. dollar, along with other specific commodity factors, has put heavy pressure against resources in the markets. However, few know about a raw material that has defied this trend: lithium (Li). Its value has steadily increased. But how do you know which lithium mining stocks are the best? Indeed, next year could be bullish for Lithium. Here we discuss some of the top lithium stocks to watch in 2017.
Should You Invest in Lithium Stocks in 2017?
The first question to ask, if you’re worried about the course of the markets next year, is: should you invest in lithium stocks in 2017? Given the relatively young nature of this market, is there even such a thing as the “best lithium stocks”? The answer to both questions is yes. There are not many lithium stocks to begin with, which makes choosing between them easy.
But first, for those investing in lithium, there are two ways to profit. One is from the raw material itself. The other is from Li-ion batteries, which means lithium battery stocks. Unlike silver or gold, there are no lithium futures; so you don’t trade lithium as you would precious metals. Lithium, moreover, does not respond to the same geopolitical and market forces that drive gold. For example, a high or low U.S. dollar means absolutely nothing where lithium investments are concerned.
That said, here is a lithium stock list that I have arranged in two parts. One is a lithium stock list for the raw materials, and the other is a lithium battery stock list.
The Top Lithium Mining Stocks
- Sociedad Quimica y Minera de Chile (ADR) (NYSE:SQM). SQM is one of the largest lithium producers. It is now engaged in a joint venture with a junior miner, Lithium Americas Corp (TSX:LAC), to exploit a massive lithium carbonate deposit in the Salar de Cauchari of Argentina’s Jujuy province. SQM expects to spend some $500.0 million in order to produce about 40,000 tonnes of lithium carbonate over the next 30 years. (Source: “Chilean SQM’s Argentina joint venture project to cost up to $600 mln,” Reuters, May 5, 2016.)
- FMC Corp (NYSE:FMC) is another major lithium producer, gearing up to handle a boost in demand. Now, investing in FMC is not just investing in lithium, so the risk profile is different. FMC has suffered through a few bearish years since the collapse of commodities in 2012. But lithium has already shown its potential to lift FMC stock. FMC is gaining more of a reputation as a lithium producer. The company is already expanding its capacity to supply a “major” manufacturer of electric vehicles. Presumably, this is Tesla Motors Inc. (NASDAQ:TSLA). (Source: “FMC strikes supply deal; accelerates expansion plans,” Industrial Minerals, July 26, 2016.)
- The world’s main lithium producer is Rockwood. But this company is now a unit of Albemarle Corporation (NYSE:ALB). Rockwood controls some 33% of global lithium production, with revenues of over US$500.0 million. Rockwood’s lithium assets are largely based in Australia and Chile, but its parent company, Albemarle, is one of the few lithium stocks with deposits in the United States. Rockwood is well placed to benefit from Tesla Motors’ expansion of lithium battery production in Nevada, where the electric car company is building its massive Li-ion battery facility. The “Gigafactory” should start producing and delivering batteries in 2017, which makes this a perfect lithium battery stock.
There are few lithium battery stocks. The idea here is less which battery stock to pick, and more one of getting into the lithium battery trend in the first place. Indeed, to speak of a battery trend is a misnomer. Lithium batteries are more than a trend; they are the energy source of the future. Tesla Motors Inc has become a dedicated lithium battery producer, particularly after its outright acquisition of SolarCity Corp (NASDAQ:SCTY). Tesla will start producing batteries in 2017, which makes this an ideal lithium battery stock. Tesla is banking on demand for its electric cars to surge, and its production capacity to match demand, which is for at least half a million electric cars by 2018.
Alternatively, Panasonic Corporation (ADR) (OTCMKTS:PCRFY) is one of the world’s top lithium battery companies. Panasonic has worked jointly with Tesla on the Gigafactory in Nevada. But Panasonic’s lithium battery unit is just a minor aspect of this huge Japanese concern. So, unlike Tesla, the risk profile is more diverse.
The Bottom Line on Lithium Battery Stocks
The point of lithium is that this ore is becoming essential, not just for all rechargeable batteries on the planet (including those for tablets, smartphones, and electric cars), but is also used to strengthen industrial glazing, air-cleaning aircraft and submarines, and dozens of other uses known only by engineers and which are impossible to list on a single page. So, click here to get some more ideas on how to start making money from lithium. Read: “17 Million Drivers No Longer Pay for Gas?”