Lithium stocks are on the upswing again.
Albemarle (ALB), for example, is up $6.25 on the day after Bank of America upgraded the stock to neutral with a $200 price target. They note lithium prices have finally stabilized, and could rally in the near-term. As noted by the firm, “Lithium buyers are returning to spot markets following a lengthy inventory destock and an ongoing acceleration of electric vehicle demand, and spodumene producers have exercised production discipline.”
Helping, Morgan Stanley says lithium prices have bottomed out, and expects supply to stay tight this year. “Although China’s EV sales and battery production are back in growth mode after a lackluster start of the year, cathode and battery cell producers are still not fully back buying in the spot market, but sentiment is clearly improving and their lithium inventories appear to have eroded,” the analysts said, as quoted by Trading View. “Unlike for nickel and cobalt, we still model a full-year lithium market deficit for 2023, and we expect the recently oversupplied lithium market to become tighter again for the remainder of 2023.”
That being said, investors can always race to buy oversold names, like Albemarle (ALB), Lithium Americas (LAC), American Lithium (AMLI), and even Livent (LTHM). Or, they can look for better diversification at lower cost with lithium-related ETFs, such as:
Global X Lithium & Battery Tech (LIT)
With an expense ratio of 0.75%, the LIT ETF invests in the full lithium cycle, from mining and refining the metal, through battery production. Some of its top holdings include Albemarle TDK Corp. Panasonic, BYD Co., Tesla, Livent Corp, Piedmont Lithium, and Standard Lithium.
Amplify Lithium & Battery Technology ETF (BATT)
With an expense ratio of 0.59%, the BATT ETF provides exposure to global companies deriving material revenue associated with the development, production and use of lithium battery technology. Some of its top holdings include Tesla, LG Chemical, Albemarle, Sociedad Quimica y MInera, Panasonic, BHP Group, and BYD Company to name a few.
KraneShares Electric Vehicles and Future Mobility ETF (KARS)
The Krane Shares Electric Vehicles and Future Mobility ETF (KARS) is starting to accelerate, too.
With an expense ratio of 0.70%, this ETF provides exposure to companies involved in the production of EVs and their components.
It’s also benchmarked to the Bloomberg Electric Vehicles Index, which includes stocks involved with electric vehicle production, autonomous driving, shared mobility, lithium and/or copper production, lithium-ion/lead acid batteries, hydrogen fuel cell manufacturing, and electric infrastructure businesses, according to KraneShares.com. Some of its top holdings include Albemarle, BYD Co., Tesla, Panasonic Holdings, Aptiv, Samsung, and Lucid Group to name a few.