4 juicy lithium stocks for me to consider buying now

Jon Smith talks through several lithium stocks he’s keen on right now, ranging from mining companies to end-product users.

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Like a kid in a candy shop, sometimes having too much choice can be a problem. However, reviewing multiple potential investment opportunities does give me the option to benchmark each of them. From that, I can decide where is best to invest.

When reviewing lithium stocks as a growing area of interest, here are a selection I’m eyeing up.

Skipping straight to the end

The first two options I’m thinking about are linked to lithium via the end product – in this case electric vehicles. Tesla and NIO are two of the largest players in this area. Lithium is needed as a key element making up the car batteries.

Tesla is in the process of negotiating with authorities in Texas to have a lithium refinery built in the state. This will make it easier for the business to control the supply chain and pricing. After all, since the beginning of 2020, the lithium price has gone 10x higher. Any ability to cut out middle-men adding additional margins will help save on costs.

For both Tesla and NIO, the share price movements won’t be entirely dictated by the lithium price. Yet I don’t see this as a bad thing. It’ll be one of a number of factors influencing the stock price, which I feel affords me some safety.

Starting at the beginning

More direct exposure to lithium can be found via mining stocks. Two specific ones I’ve found are Ganfeng Lithium and Tianqi Lithium. Both companies are based out of China and listed either locally or in Hong Kong.

Straight up, this is a potential problem. I can buy the stocks, but a quick scan shows me that not all of my investment providers can access it. It’s not that these are small companies (Ganfeng has a market-cap of over $22bn), but Asian stock markets aren’t as easy to access for UK retail investors like myself.

Putting that to one side, both businesses excite me. Tianqi shares are up 17% in a year and 83% over five years. These mining stocks buy up and operate projects around the world. For example, Tianqi has a 51% stake in the world’s largest lithium mine in Australia. If we do see continued demand in years to come, these type of companies are absolutely key to the whole process. As such, I feel investors will be keen to get exposure via the stock market.

Having fingers in many pies

These companies reflect just two types of lithium stocks, one at the origination stage and the other at the final usage stage. I’m aware there are many other firms within this space that warrant potential investment as well.

On that basis, I think I’m going to invest a small amount in all four companies shortly. I’m going to keep some more cash free so that in coming months I can hopefully identify more stocks to buy from this area.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jon Smith has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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