Lithium stocks are on the cusp of a turnaround after taking a beating in the market over the past year. In the world of investing, going against the grain – being contrarian – can often lead to discovering hidden gems. While this strategy comes with its risks, the potential to unearth undervalued assets that could yield substantial returns is undeniable.
A Leap of Faith: Arcadium Lithium (ALTM)
Arcadium Lithium (NYSE:ALTM) emerges as a phoenix rising from the ashes of the Livent and Alkem merger. Specializing in lithium chemicals, particularly focusing on battery-grade lithium hydroxide, lithium carbonate, butyllithium, and high-purity lithium metal for electric vehicles, the company stands on the brink of greatness.
The impending merger between Livent and Alkem is a sweet symphony to investors’ ears. Promising an output of between 40,000 to 50,000 tonnes of lithium equivalent ounces and an anticipated $80 million in synergy cost savings, Arcadium Lithium shines as a beacon of hope in the lithium market.
With a net profit margin of a staggering 37.41%, translating into a mere 6.9x price-to-earnings ratio, ALTM stands tall as a titan of value in the world of stocks.
Riding the Wave: Albemarle (ALB)
ALB (NYSE:ALB) may have endured a harsh downturn, shedding over 30% of its market value in the past six months, but it remains the undisputed heavyweight champion of the lithium production world. With key segments in production and energy storage, Albemarle’s vertical integration prowess positions it for unparalleled success.
Despite recent setbacks, Albemarle’s ambitious plans for expansion, including the commissioning of a lithium conversion facility in China set to produce 50,000 tonnes of lithium hydroxide annually, demonstrate the company’s unyielding commitment to growth and innovation.
Trading at a non-GAAP P/E ratio of 5.42x and a price-to-book ratio of 1.5x, Albemarle presents a tantalizing opportunity for investors seeking substantial returns in the near future.
The Long Game: Sociedad Química y Minera de Chile (SQM)
Sociedad Química y Minera de Chile (NYSE:SQM) may be weathering pricing challenges, but the company’s steadfast commitment to long-term growth sets it apart. With bold initiatives such as a $1.7 billion capital expenditures plan until 2025 and ongoing production expansion in Chile and China, SQM is primed for a resurgence.
Marked by a modest P/E ratio of 6.82x, SQM holds the promise of being an undervalued gem waiting to be discovered by savvy investors looking to capitalize on the inevitable upswing in lithium prices.
On the date of publication, Steve Booyens did not hold any positions in the securities mentioned in this article. The opinions expressed in this article are solely those of the author, following the guidelines of InvestorPlace.com.
