Lithium Americas (TSX:LAC) is a Vancouver-based resource company that operates in the United States and Argentina. As the name suggests, this company is focused on the exploration and eventual production of lithium. Today, I want to discuss why I’m looking to stack shares of this lithium stock, as the space looks primed for an eruption in the years ahead. Let’s jump in.
How has this lithium stock performed over the past year?
Shares of this lithium stock closed at $24.04 per share on Friday, September 22. That means that Lithium Americas stock has posted a small loss so far in 2023. It came into January 2023 trading just above the $25 mark. The lithium stock has dropped over 30% in the year-over-year period. Investors who want to see more of its recent and past performance can play with the interactive price chart below.
Here’s why you should seek exposure to this exciting sector
Electric vehicles (EVs) were largely a novelty among automobile owners in the 2010s. The rise of Tesla provided an air of prestige to EV owners who were able to splurge on the luxury vehicle. Major automobile manufacturers have joined the EV party in the 2020s, and this is now a space that boasts intense competition.
Sales of EVs saw record sales in 2022. The EV space is ready to set new records after a terrific first three quarters this year. Back in April, the International Energy Agency showed in its Global Electric Vehicle Outlook that more than 10 million EVs were sold globally in 2022. The report projected that sales would grow by another 35% in 2023, reaching 14 million sold worldwide. Moreover, this means that EVs have grown their overall market share from a modest 4% in 2020 to 14% in 2022. The report projects that the market share will hit 18% by the end of 2023.
The explosion in EV sales is great news for lithium producers, as demand for lithium-ion batteries is skyrocketing. Fortune Business Insights valued the global lithium mining market at $343 million in 2021. The same report projected that this market would deliver a compound annual growth rate (CAGR) of 6% from 2021 through to 2028. That would mean the overall market would hit $516 million at the end of the forecast period.
Should investors be happy with Lithium Americas’s recent earnings?
This company released its second-quarter (Q2) fiscal 2023 earnings on August 9. Lithium Americas’s Argentina property achieved its first lithium production in June 2023. This gigantic milestone should make investors very happy. The preparation for Cauchari-Olaroz Stage 2 expansion, which targets additional production capacity of at least 20,000 tonnes per annum (tpa), is currently underway.
In the United States, Lithium Americas announced that the Thacker Pass location was targeting initial production for the second half of 2026.
Lithium Americas currently boasts a solid balance sheet, as it aims to significantly ramp up production in the middle of this decade. This company is in a terrific position to capitalize on lithium demand, as it is making huge strides on the production front. That is why investors cannot ignore this lithium stock at its current price.
Why I’m buying this lithium stock today
Investors should be attracted to this lithium stock that offers massive growth potential over the long term. If you can stomach the early years as it aims for production, you have a great shot at reaping the rewards that could come in the second half of this decade.