Best lithium stocks

Lithium stocks are racing ahead like a Duracell bunny, with the market worth a whopping $7.5 billion (about £5.9 billion) and forecast to grow 12% a year for the rest of this decade.

Each electric vehicle (EV) needs around 8kg of lithium to drive on rechargeable batteries. Multiply that by the 145 million EVs predicted to be on the road by 2030, and, well, that’s a whole lot of lithium.

What are the best lithium stocks?

Finding the best lithium stocks can be almost as hard as trying to mine the material itself. There’s no way to know which companies will see long-term success.

To give you a starting point, here are the top constituents in the Stoxx Global Lithium Miners and Producers Index, which is the industry benchmark followed by popular exchange-traded funds (ETFs) like the iShares Lithium Miners and Producers ETF.

Stock	Icon	1 year performance (January 2024)	5 year performance (January 2024)	Link to invest
Cosmo Advanced Materials & Technology (005070)		170.86%	837.53%	Invest with XTBCapital at risk
SK IE Technology (361610)		49.02%	-40.71%	Invest with XTBCapital at risk
Liontown Resources (LTR)		20.83%	7,875.00%	Invest with XTBCapital at risk
Sigma Lithium (SGML)		16.59%	1,910.74%	Invest with XTBCapital at risk
Pilbara Minerals (PLS)		3.76%	493.85%	Invest with XTBCapital at risk
Allkem (AKE)		-13.39%	205.28%	Invest with XTBCapital at risk
Livent (LTHM)		-15.42%	+15.78%	Invest with XTBCapital at risk
Sociedad Quimica Y Minera De Chile (SQM)		-30.37%	1.20%	Invest with XTBCapital at risk
Tianqi Lithium Industries (002466)		-34.39%	119.02%	Invest with XTBCapital at risk
Albemarle (ALB)		-37.30%	83.87%	Invest with XTBCapital at risk

What are lithium stocks?

Lithium is an increasingly popular commodity. It’s a lightweight, highly reactive metal used primarily in rechargeable batteries for electronics and electric vehicles (EVs).

The companies involved in the metal’s supply chain are global and involve everything from junior mining stocks (like exploration companies) looking for the metal in the ground to high-tech firms investigating its applications in cutting-edge technology.

How to invest in lithium stocks

1. Open a share dealing account. Whether you want to invest directly in lithium stocks or use an investment fund, you’ll need to open a share trading account.
2. Fund your account. The next step is to deposit money into your account to buy shares or invest in a fund, either by bank transfer or using a debit card.
3. Choose your lithium stocks. Either select a direct or indirect lithium investment and research the stock you’re considering. Once you know what you want, find the lithium stocks on your platform.
4. Review and hit buy. It’s as simple as that.

Compare share dealing accounts to find the right platform for you. Make sure to use a platform with access to international markets or a large ETF selection if you want to invest in top lithium stocks from around the world.

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Why do people want to invest in lithium stocks?

Lithium stocks are sparking investor interest due to the metal’s role in a host of green technologies and some of the main benefits of investing in lithium includes:

• EV demand. EVs have zoomed from 5% of auto sales in 2020 to a revved up 14% in 2022. This surge has fuelled a whopping 65% increase in demand for lithium-ion batteries. And demand seems to be heading in one direction.
• Solar and wind. Lithium is also shining bright in the renewable energy sector. These green sources of power don’t work when the sun stops shining and the wind quits blowing – and that’s where lithium batteries come in as a storage solution that smooths out these troughs and peaks.
• Popular commodity. With demand for this versatile metal expected to multiply sevenfold by 2030, lithium stocks are not just a flash in the pan; they’re a bright spark in a growing low-carbon world.
• Limited supply. The challenge of limited supply, amidst the booming demand, turns these stocks into a potentially electrifying investment opportunity.

But before you start loading up your portfolio with this “white gold”, it’s essential to explore the risks.

What are the risks of investing in lithium stocks?

Lithium may be the first metal on everyone’s lips when it comes to green tech, but there are some downsides to consider if you’re thinking about investing:

• Competitor technologies. Take for example antimony-based batteries, which are being developed by Ambri, a tech start-up with backing from Microsoft founder Bill Gates. Ambri claims its lithium-free batteries are superior when it comes to the large-scale storage of green energy, with a number of pilot projects underway.
• Alternate materials. There are other elements and materials that could challenge lithium, like hydrogen for example. One firm, Plug Power, has even signed a contract with Amazon to provide enough green hydrogen to power 30,000 forklifts in the e-commerce giants’ warehouses.
• Mining risks. There are company-specific risks. With junior exploration companies, there’s always the risk that you’re buying shares in well-marketed ventures that will never actually amount to anything. Also, there’s plenty of moving parts in mines and it only takes a few mechanical failures for costs to sky-rocket.
• Unstable countries. When it comes to up-and-running producers of lithium, it’s worth thinking about political and geographical risks, especially in developing, non-English speaking countries. South America is home to the so-called “lithium triangle”, but do you really understand the Chilean, Argentinian, or Bolivian mining codes and political systems well enough to invest your hard-earned money there?

Our expert says: Will lithium stocks skyrocket and boom?

"We’re already seeing plenty of rising demand for lithium in various industries, and this pumping demand is leading to higher prices as the supply of lithium gets squeezed. However, as demand for lithium grows, there’s likely to be more efficient and cheaper ways to obtain the material – possibly even better tech for recycling it.

If lithium demand continues on its current trajectory, it’s likely to be an exciting space for all the stocks involved. But, the key dangers to the sector (like new technology and the use of alternative materials) could mean that money moves elsewhere over time. Especially, if investors feel uncomfortable putting money into unstable regions where lithium is located and mined."

George Sweeney, DipFA

Deputy editor

Alternative ways to invest in lithium

Investing in lithium doesn’t just mean buying stocks in individual mining and exploration companies.

If you don’t fancy picking between top lithium stocks, you can invest in all of them at once (and lots of others) by investing in ETFs like the following examples:

• iShares Lithium Miners and Producers UCITS ETF (LITM)
• WisdomTree Battery Solutions UCITS ETF (VOLT)
• Global X ETFs ICAV Lithium & Battery Tech UCITS ETF (LITG)

All of which contain some of the biggest and best global lithium stocks around. ETFs can offer diversified exposure to a range of companies within the lithium industry. This can include miners, battery manufacturers and tech stocks that are heavily linked with lithium – like Tesla (TSLA) for example.

Another option is investing in lithium recycling companies, which is becoming more popular as the need for sustainable lithium sourcing grows. These companies focus on recovering lithium from used batteries.

Pros and cons

Bottom line

With the lithium market speeding faster than a Tesla on launch mode, and an anticipated explosion in EVs and energy storage needs – lithium stocks are hot property. Whether you’re into high-tech innovators or down-to-earth miners, there are more than a few ways to invest.

Just remember while riding the lithium buzz to keep an eye on the horizon for emerging technologies and geopolitical ripples that could lead to a powering down of some of these stocks.

• What's been going on with the lithium price?

  Lithium's price journey in 2023 has been quite the rollercoaster. After reaching dizzying heights, lithium has taken a steep dive, plummeting by a dramatic 73% since the year's start.

• Where is lithium's price headed?

  Experts are split between bullish and bearish forecasts. Goldman Sachs, leading the bearish camp, predicts lithium prices plunging to $53,300 a ton in 2023 and further down to $11,000 in 2024 as supply ramps up.

  On the flip side, Macquarie Research sees prices averaging $62,586 in 2023 and staying strong at around $72,500 until 2026, banking on a supply deficit. So, where's lithium headed? Well, it's anyone's guess in this high-stakes market tussle.

• Are lithium stocks worth investing in?

  Lithium stocks are pivotal in the EV and renewable energy sectors and they are enjoying some strong tailwinds. However, market volatility and competition from emerging technologies pose risks.

  Investing requires careful consideration, and experts usually warn against allocating more than a small percentage of your portfolio to a high-risk play like this one.

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