Many investors come to the stock market with the aim to double their money. While this is not an unrealistic expectation, the timeline has to be realistic. A stock market is a place where individual investors can participate and fund the growth of companies. So if you want to double your money, look for a secular trend supported by the government, industry, and consumers. One such trend is electric vehicles (EVs).
Something about lithium
Several automakers are investing in EVs, and it is difficult to say which company will win big. So how do you choose the big winner in the EV trend? Let’s go down the supply chain to the very bottom. The biggest challenge for EVs is the availability of lithium, a metal used to build lithium-ion batteries. Lithium is used not just in EV batteries but all batteries, rechargeable or non-rechargeable.
Lithium is everywhere, from your mobile phone to your laptop to your kid’s toy. The good part about lithium is the battery is rechargeable, and the lithium inside is recyclable. And with the United States looking to reduce dependence on other nations for core minerals, the government is encouraging companies to mine and recycle lithium in America.
The problem is that lithium core is widely available, but the pure form of battery-grade lithium is scarce. As more and more EVs hit the road, there will be growing demand for battery-grade lithium.
Lithium stocks are the new oil stocks
The stocks harnessing the potential of lithium will stand to benefit as every automaker will look to secure lithium supply. Demand is not a problem, but supply is. Some lithium mining companies are at different stages of extracting and refining the metal.
Sigma Lithium (TSXV: SGML) has been exploring and developing a lithium deposit in Brazil for over two years. The procedure is lengthy as it has to undergo feasibility studies and develop environmentally and socially sustainable ways of mining lithium. As the development progresses, Sigma Lithium’s stock surges with every update, rising 1,360% since the start of 2021.
The company is on track to start producing battery-grade lithium concentrate from April and generate cash flows in the second quarter. The mine could make Sigma the fourth-largest lithium producer in the world.
Sigma’s growth story raises hopes for other lithium miners in the early stages of exploration. The delay in the EV boom is an opportunity for such companies as they get more time to develop the mines.
This stock has a legit shot to double your money in the EV wave
Lithium Americas (TSX: LAC) is a Canadian mining company that is still in the early stage of developing the Thacker Pass Project in Nevada. The project is believed to have the largest lithium resources in the United States and expected to commence production in the second half of 2026. The company’s stock has the potential to double your money as the project commences production. General Motors has already signed a deal with LAC to get the first rights on the lithium mined.
LAC stock is moving in tandem with auto component maker Magna International stock. LAC stock has slipped 36% from its April high as rising interest rates and supply chain issues pulled down EV stocks. Most automakers had high inventory and slower revenue growth in 2022. But Sigma Lithium was unaffected by the macro and industrial events. Between Magna and LAC, I am more bullish on LAC as it is on track to become the largest lithium producer.
How to invest in Lithium Americas
Lithium Americas doesn’t give dividends and is highly cyclical. When looking for growth stocks, you should weigh the risk and reward. LAC stock could fall as much as 50% in a few months but recover and make a new high as long as the Thacker Pass Project is in place. The stock could double your money in three years if everything goes well or in five years if there are hiccups. Invest in LAC for the reward, but also diversify your portfolio to reduce risk.
