Is Now the Time to Buy Lithium Stocks?

The lithium shortage could cause its price to skyrocket, making it a great time to buy lithium stocks like Sigma Lithium Corporation.

| More on:
Man data analyze

Image source: Getty Images

When it comes to the stock market, timing is critical. You might have seen a big market trend, but if you invest in it too early or too late, your portfolio might not do well. A few years ago, when sales of electric vehicles (EVs) were going up, many investors saw a trend in lithium mining stocks. Now, the price of lithium is at a record high, and lithium stocks have done better than the stock market as a whole.

Some people think the trend could go on for decades, while others think the prices are too high and need to go down. Here’s what you need to know if you want to bet on this trend.

Clean energy transition is speeding up

We know that the switch to cleaner energy sources is picking up speed. In recent years, governments have set higher goals for reaching net-zero emissions. That means that some big countries have set up programs to encourage the use of electric cars and large-scale battery storage.

This change is getting urgent, because of the ongoing energy crisis and the conflict in Ukraine. The International Energy Agency says two million electric vehicles were sold worldwide in the first quarter of 2022. This is 75% more than the same time the year before (IEA). The agency thinks that by the end of the year, sales of electric vehicles will hit a “record high.” The IEA thinks that the amount of energy stored in grid-scale batteries will increase 44-fold between 2021 and 2030.

Both of these changes need lithium, a key part of electric batteries. This important material is in short supply, which is a problem.

Lithium production hasn’t kept up with the need for batteries. The world will need 1.4 million tonnes of lithium by 2025 to meet the demand for electric vehicles (EVs) and grid-scale batteries. However, only 1.8 million tonnes will be available that year. By 2030, demand will reach 4.6 million, while supply will only be 3.5 million.

Simply put, we don’t have enough lithium to reach the energy goals of the world. Experts think the lithium shortage could cause its price to go through the roof. 

One of the best lithium stocks to buy now

The next 10 years will likely be a good time to mine for lithium. 

Sigma Lithium (NASDAQ:SGML) is a leading supplier of battery-grade lithium and one of the top lithium battery stocks to invest in. This Canadian mining company is focused on lithium deposit exploration and development in Brazil. The company is heavily invested in the electric vehicle (EV) market. Its products are in a wide range of EV applications, including passenger cars, commercial vehicles, and industrial vehicles.

The Grota do Cirilo, Genipapo, Santa Clara, and So José properties are wholly owned by the company and consist of 27 mineral rights spanning approximately 191 square kilometres in the Araçua and Itinga regions of the Brazilian state of Minas Gerais.

Sigma stock has gained more than 280% year to date, and the company is valued at $4.85 billion.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Stephanie Chateauneuf has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Energy Stocks

Red siren flashing
Energy Stocks

Buy Alert: 4 Reasons Why TC Energy Stock Is a Must-Own Now

A large-cap energy stock is a strong buy today for four compelling reasons.

Read more »

Oil pipes in an oil field
Energy Stocks

Here’s Why Enbridge Stock Looks Like a Great Buy

Consider looking at Enbridge (TSX:ENB) if you seek high-yielding but safe dividends for your self-directed portfolio.

Read more »

oil and natural gas
Energy Stocks

3 Energy Stocks Already Worth Your While

TSX energy stocks could shine for much longer. Here's why Canadian Natural Resources (TSX:CNQ), Parex Resources (TSX:PXT), and another oil…

Read more »

Utility, wind power
Energy Stocks

Brookfield Renewable Partners Stock: Buy, Sell, or Hold?

BEP stock (TSX:BEP.UN) now trades at half its share price back in 2021. So what should investors do with this…

Read more »

Technology
Energy Stocks

2 No-Brainer Energy Stocks to Buy With $5000 Right Now

Cenovus Energy is one of two high quality energy stocks that are undervalued and well-positioned for long-term success.

Read more »

Gas pipelines
Energy Stocks

Here’s Why Enbridge Is a No-Brainer Dividend Stock

Enbridge stock has resilient operations, significant competitive advantages and a safe payout ratio, making it a top dividend stock.

Read more »

Solar panels and windmills
Energy Stocks

Buy 849 Shares of This Super Dividend Stock for $3,100/Year in Passive Income

Looking for a super dividend stock to buy now? Here's a discounted top pick that can provide an ample income…

Read more »

Oil pumps against sunset
Energy Stocks

Suncor Stock: A Millionaire Maker?

With a renewed focus on extracting value from its integrated business, we can expect tremendous value creation from Suncor stock.

Read more »