As of Oct. 14, shares of major lithium producers Albemarle (ALB 2.70%), Sociedad Quimica y Minera de Chile (SQM 0.81%) (also known as SQM), and Livent (LTHM) have returned 155%, 156%, and 144%, respectively, over past two years.

For context, the S&P 500 index has returned 5.9% over this period, and in the wake of 2022's bear market, the tech-heavy Nasdaq Composite is underwater, with a total return of negative 11%.

The main driver for these lithium stocks' powerful performances has been the surging demand for the material, which is used to make batteries for electric vehicles (EVs). The supply of battery-grade lithium has been tight relative to demand, which has lit a fire under prices. But can these lithium stocks double (or more) again over the next two years?

The long-term picture for select lithium stocks remains bright

It's highly unlikely that shares of Albemarle, SQM, and Livent will perform as well over the next two years as they have over the last two.

The macroeconomic environment is much different now than it was in late 2020. Inflation has surged, mostly due to factors related to the pandemic, and the Federal Reserve is aggressively raising interest rates in an effort to get inflation back under control. These macro factors have walloped stocks broadly, and there could be more pain in store for the market if the economy slips into a recession.

In addition, lithium miners have stepped up the pace of expanding their production capacity. So it's possible that demand for the metal won't outstrip supply to the same degree that it has recently. That will hold especially true if a recession occurs while significant additional capacity comes online. 

While the short term could be challenging, the long-term picture for select, high-quality lithium stocks remains bright. The EV revolution is still in its early innings, as illustrated by this fact: At the end of 2021, less than 2% of the light-duty vehicles on the road worldwide were all-electric or plug-in hybrids.  

Moreover, heavy trucks and other forms of transportation are in even earlier stages than cars of "going electric." The electrification of these other forms of transportation should greatly increase demand for lithium for decades. 

Albemarle and Livent would be the best bets for most investors

Most investors who want to buy shares of a well-established major lithium producer should stick with Albemarle and Livent. These companies are both headquartered in the United States, whereas SQM is based in Chile. That gives it a higher risk level from currency and political standpoints. 

SQM stock has recently been the best performer of these three stocks, though it has significantly lagged Albemarle over the last decade (Livent has only traded since 2018). Moreover, SQM's high dividend yield might be tempting to some. But, in my view, this stock is only suited for investors who are not only comfortable with higher risk, but who also closely monitor foreign currency exchange rates and geopolitical factors.

The most significant difference between Albemarle and Livent is that Livent is a pure play on lithium, while Albemarle is not. In the second quarter, Albemarle's lithium business accounted for 60% of its revenues and a higher percentage of its profits. Albemarle is the better choice for investors who appreciate some diversification.

There's another difference that's worth noting. Albemarle pays a dividend -- it yields a modest 0.7% at the current share price -- while Livent does not. 

Both companies have been performing exceptionally well. In the second quarter, Albemarle's revenue surged 91% year over year to $1.48 billion, and its adjusted earnings per share rocketed 288% to $3.45. In the same quarter, Livent's revenue surged 114% year over year to $218.7 million, and its adjusted earnings per share increased about nine-fold to $0.37.

Third-quarter results will be coming soon. Livent is slated to report after the market close on Nov. 1. Albemarle hasn't yet set a date, but its release will probably also arrive early next month.