Please ensure Javascript is enabled for purposes of website accessibility

Why Lithium Americas Stock Soared 57% in January

By Beth McKenna - Feb 7, 2021 at 12:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Canadian junior lithium miner's stock has continued its 2020 electrifying performance into 2021.

What happened

Shares of Lithium Americas (LAC -4.87%), a development-stage lithium mining company, soared 57.1% in January, according to data from S&P Global Market Intelligence. For context, the S&P 500 index, with dividends included, fell 1% last month.

Lithium Americas stock's January performance comes on the heels of its spectacular run in 2020, when it gained 296%.

Two lithium-ion battery packs laying on a flat surface.

Image source: Getty Images.

So what

We can attribute Lithium Americas stock's powerful performance last month to two key catalysts.

First, shares popped 29.7% in the two-day period following the Jan. 5 Senate runoff elections in Georgia. The wins by the two Democrats meant that the party wrestled control of the U.S. Senate from Republicans. With the White House and both chambers of Congress all under Democratic control, investors are optimistic about the potential for progress on the renewable energy/climate change front. Lithium is needed to produce the batteries that power electric vehicles (EVs).

Shares popped 30.6% on Jan. 19, which was the first trading day following the company's announcement of a key milestone that moved its Thacker Pass lithium project in Nevada a step closer to the commercialization stage. After the market close on Jan. 15, the company shared the news that the U.S. Bureau of Land Management issued a Record of Decision for this project following completion of the National Environmental Policy Act process.

What's next? According to the press release, "Applications for key state permits and water rights transfers have been submitted, with results expected later this year."

LAC Chart

Data by YCharts.

Now what

Lithium Americas' future is looking more promising thanks to the two catalysts covered in this article. That said, as I have written previously, the stock "remains speculative since the company isn't yet mining any lithium for commercial sale. So, only investors who are quite risk-tolerant should consider buying it."

Investors who are interested in the lithium space, but want to bet on a well-established company might consider Albemarle, Sociedad Quimica y Minera (SQM), or Livent. Albemarle and Livent are U.S.-based, while SQM is headquartered in Chile; Livent is the only pure play on lithium of the three companies.

 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lithium Americas Corp. Stock Quote
Lithium Americas Corp.
LAC
$20.50 (-4.87%) $-1.05
Albemarle Corporation Stock Quote
Albemarle Corporation
ALB
$211.89 (-5.06%) $-11.30
Sociedad Quimica y Minera de Chile S.A. Stock Quote
Sociedad Quimica y Minera de Chile S.A.
SQM
$84.30 (-3.20%) $-2.79
Livent Corporation Stock Quote
Livent Corporation
LTHM
$22.79 (-4.32%) $-1.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
319%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.