Lithium stocks are on fire. No matter where you look, from well-established lithium mining companies to young players that are yet to generate any revenue, most lithium mining stocks have surged by triple-digit percentages in just the past couple of years or so.
It's no coincidence that the electric vehicle (EV) industry took off at around the same time -- global EV sales rose 40% in 2020 and then doubled in 2021 to record highs. Two things surged alongside EV sales: demand for lithium-ion batteries that power nearly every EV out there today, and investor interest in lithium mining stocks.
This could just be the beginning. EVs still made up barely 10% of global car sales in 2021, and demand for lithium-ion batteries could grow at a compound annual average rate of 30% over the next decade, according to consulting firm McKinsey & Company. Lithium prices already hit record highs in March this year.
In short, now's the time to invest in lithium stocks to play the coming EV boom. Here are the two top lithium stocks to load up on right now.
This no-brainer lithium stock is growing sales exponentially
Among the few pure-play lithium companies trading publicly today, Livent (LTHM +0.00%) stock stands out for several reasons.
First, Livent, as I mentioned, is a lithium pure-play that generates more than 90% of its revenue from lithium compounds, especially battery-grade compounds. Investing in Livent stock, therefore, is one of the best ways to gain exposure to lithium.
NYSE: LTHM
Key Data Points
Second, Livent is a vertically integrated lithium producer and can therefore produce lithium at low costs. It primarily operated in Argentina and generated a gross margin of 21% in 2021.
Third, Livent is expanding its production capacity aggressively. Between 2022 and 2030, Livent expects to grow its lithium carbonate capacity by fivefold. The compound primarily goes into the making of EV batteries. The lithium miner is also pumping money into battery-grade lithium hydroxide and expects to nearly triple capacity by 2030. In fact, Livent recently struck a six-year agreement with legacy automaker General Motors to supply it with lithium hydroxide for EVs starting in 2025.
In its latest quarter, Livent's net income jumped almost tenfold year over year, leading the lithium miner to boost its full-year revenue and earnings guidance. With Livent now targeting almost 100% growth in revenue at the midpoint for 2022, it appears like a no-brainer lithium stock to invest in.
This top-notch lithium stock is also a dividend powerhouse
Albemarle (ALB +2.24%) might be dabbling in bromine and petrochemical catalysts, but lithium is what the company is focused on right now. In the 12 months ended March 31, Albemarle generated 45% of its total sales from lithium. The commodity contributed barely 36% to its sales in 2019.
In fact, Albemarle is one of the world's largest lithium mining companies today, and that's what makes it such a compelling lithium stock to invest in.
NYSE: ALB
Key Data Points
Albemarle knows where growth lies: Nearly 70% to 80% of its lithium revenue this year is expected to come from battery-grade compounds, and by 2026, Albemarle expects energy storage (primarily EV batteries and grid) to make up more than 85% of its lithium revenue backed by rapid capacity expansion across the U.S., China, and Australia.
Albemarle is evidently targeting the world's top EV markets -- the U.S. and Europe combined are expected to bring almost a quarter of its lithium revenue by 2026 compared with less than 5% revenue last year. Moreover, China alone could contribute 40% to 45% to its lithium revenue, and the rest of Asia the remaining portion. China and Europe are the largest EV markets in the world.
Albemarle is firing on all cylinders. It grew sales by 97% year over year in its second quarter and bumped up its full-year outlook, now projecting a staggering 121% growth in 2022 sales at the midpoint. Thank lithium for that.
If you're still not convinced, here's another reason why Albemarle is one of the best lithium stocks to buy: It is a Dividend Aristocrat, having increased its dividend every year for 27 consecutive years now.
Worth your money
Some investors believe they've missed the rally in lithium stocks. Far from it. Lithium has found its way into one of the fastest growing industries today -- EVs. Yet lithium mining isn't easy, which means existing players could grow dramatically if they can exploit their resources and capabilities to the hilt. Albemarle and Livent are capable of doing so, and you're likely to be richly rewarded in the long term if you buy these lithium companies stocks now.
