From Mines to Megabatteries: 3 Lithium Stocks Ready to Boom

Rick Orford

February 14, 2024 4 min read

CBAT
ENR

The electric vehicle market has seen strong momentum these past few years, with industry experts expecting it to grow to $951.9 billion by 2030 with a 13.7% CAGR. Strong support from the government for the adoption of EVs has opened up opportunities for investors to look at related sectors.

Lithium, one of the components for building rechargeable batteries used in EVs, can benefit from this potential growth. Experts see the lithium battery market growing by 14.2% CAGR to $187.1 billion by 2032. This makes lithium stocks—and their investors—prime beneficiaries of the expected market expansion.

This article will look at three lithium stocks that are currently trading low but have a strong foothold in their respective markets.

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CBAK Energy (CBAT)

A magnifying glass zooms in on the website for CBAK Energy Technology (CBAT)

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China is one of the biggest electric vehicle markets, and CBAK Energy Technology Inc (NASDAQ:CBAT) is a significant lithium battery producer operating in the space. The company has two main segments: The Hitran segment handles iNCM precursor and cathode materials development and manufacturing. Meanwhile, CBAK produces lithium-ion rechargeable batteries in manufacturing, commercialization and distribution. CBAT’s products are widely used in light and hybrid electric vehicles, uninterruptible power supply and other high-power applications.

Despite global challenges, CBAK Energy’s latest financial results showcased strong performance. The company reported a 71.5% YoY net revenue growth from battery sales, amounting to $44.3 million. The gross margin for the battery business also surged to 26.4% (17.7 percentage points higher YoY), leading to a net income of $6.3 million, a turnaround from a net loss of $0.9 million the previous year. CBAT offers exposure to the lithium battery market with a strong market position, making it an excellent choice for one of the more attractive lithium stocks today.

Energizer Holdings (ENR)

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Since we’re talking about batteries, no doubt the Energizer Bunny comes to mind — the brainchild of Energizer Holdings, Inc. (NYSE:ENR). The popular battery company owns the Energizer, Eveready and Rayovac product brands. Energizers Holdings is well known for manufacturing and distributing rechargeable, alkaline, carbon zinc and nickel metal hydride batteries. It also offers solar chargers for different EVs.

ENR’s latest financial report showed a slight decline in net sales. Despite that, EPS ended at $0.59, exceeding analyst estimates by 3.51%. Additionally, adjusted gross margins improved to 39.5% YoY, largely driven by Project Momentum, the company’s cost-saving initiative. Just this quarter alone, Project Momentum saved approximately $16 million and is estimated to save $160 million to $180 million during the program’s life.

In other news, operating cash flow ended strong at $178.1 million. Free cash flow was about 21% of net sales. All this helped the company reduce its debt by $78 million in the quarter. ENR also recently announced dividend payments of $0.30 per share, payable by March 14, 2024. If you need lithium in your portfolio, Energizer could be a perfect lithium stock to buy-and-hold forever.

Arcadium Lithium PLC (ALTM)

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Finally, if we’re talking about formidable companies in the lithium sector, then Arcadium Lithium PLC (NYSE:ALTM) should be in the discussion. ALTM is a global lithium chemicals producer offering a wide range of products that include lithium carbonate, spodumene, hydroxide and more. Its operation activities include rock mining and lithium brine extraction.

ALTM is the result of a merger between Allkem and Livent, two of the most notable lithium companies in the world. Livent was one of the most searched-for stocks during the runup to the merger and had been doing well financially in 2023. With the merger, ALTM boasts a combined total revenue of $1.9 billion in 2022.

The merger is seen to expand the company’s development pipeline while accelerating current development projects in key locations worldwide. While estimates still aren’t in, analysts are already optimistic about ALTM’s prospects, judging for their “Buy” recommendation. It’s early days, but based on the two foundational companies’ performance and market foothold, ALTM looks like a great addition to anyone’s “lithium stocks to buy” list.

On the date of publication, Rick Orford did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Rick Orford is a Wall Street Journal best-selling author, investor, influencer, and mentor. His work has appeared in the most authoritative publications, including Good Morning America, Washington Post, Yahoo Finance, MSN, Business Insider, NBC, FOX, CBS, and ABC News.