2 top penny stocks I’m looking to buy for the lithium boom

The lithium sector is tipped to explode, and these penny stocks could be great ways to capitalise on the boom. Here are two on my shopping list today.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Smiling senior white man talking through telephone while using laptop at desk.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investing in lithium-producing penny stocks could prove a highly lucrative bet for the next decade. Demand for the silvery metal is tipped to rocket as electric vehicle (EV) sales shoot higher, with Statista analysts predicting that consumption will more than triple by 2030. This is shown in the graph below.

Graph showing projected lithium demand growth to 2030.
Source: Statista

Yet, despite this bright outlook, there is a dearth of new supply set to come online. Just over 50 projects are currently in the global development pipeline, a figure that S&P Global Market Intelligence thinks will create a material deficit of 605,000 tonnes of lithium carbonate equivalent by the end of the decade.

Two top lithium stocks

Of course there’s no guarantee that early-stage lithium miners will be able to command high prices for their product. Lower-than-forecast EV sales, for instance, could cause certain projects to be less profitable than hoped.

Digging for metals is also a difficult process. Mine development delays could leave earnings forecasts in tatters. Production problems later on could also dampen output and result in huge, unexpected costs.

Having said that, the potential reward of owning certain lithium shares could make these risks more than worth it. Here are two penny stocks I’m thinking of buying when I next have spare cash to invest.

1. Atlantic Lithium

Ghana-focused Atlantic Lithium owns what is set to be the country’s first producing lithium mine. It is hoping to produce metal there over a 12-year period beginning in the first half of 2025.

I like Atlantic because of the funding steps it has taken to get the Ewoyaa mine built. It has a deal with Piedmont Lithium that will see the Australian company fund the first $70m of an estimated $185m capital expenditure bill.

On top of this, in recent days, Ghana’s Minerals Income Investment Fund (MIIF) said it would invest $32.9m to get the asset off the ground. The agreement is non-binding, but it helps to de-risk the project still further.

The MIIF deal puts a value of $372m on Ewoyaa, according to brokers at Liberum. This underlines the huge potential of the project. Atlantic has described West Africa as a “new lithium frontier”, which, if correct, could make the producer a brilliant buy. It also owns exploration assets in Côte d’Ivoire.

2. European Metals

As owner of the Cinovec asset in the Czech Republic, European Metals is developing the largest hard-rock lithium deposit on the continent. Nestled on the Czech-German border, the project — which has a 25-year life — is located on the doorstep of some of Europe’s biggest automakers and chemical producers, as the map below shows.

Map showing the location of the Cinovec lithium asset.
Source: European Metals Holdings

When the mine’s up and running, European Metals expects to produce 29,386 tonnes of lithium each year. After recent testing, the company believes there is capacity to add a second stage that would double production.

I also like Cinovec because it is one of the world’s ‘greenest’ lithium mines. When it comes to water usage, environmental acidification, and carbon dioxide emissions, the site is at the front of the pack. These qualities could see it become highly popular as ESG investing takes off.

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.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

The flag of the United States of America flying in front of the Capitol building
Investing Articles

The Nasdaq just tanked. Here are 3 US growth stocks to consider for an ISA now

These Nasdaq stocks have a lot of potential in the long run and Edward Sheldon believes they could be worth…

Read more »

Investing Articles

Potentially 42% undervalued, is this FTSE 100 company a sleeping giant?

The FTSE 100 is full of opportunities for the patient investor, and I think I may have found one that…

Read more »

Investing Articles

AstraZeneca, a mega-cap growth stock that just got cheaper!

Our writer takes a closer look at this growth stock -- which also happens to be the largest company of…

Read more »

Investing Articles

How I’d invest £5,000 in FTSE growth stocks right now

Sumayya Mansoor explains why she’s bullish about these FTSE growth stocks, and would be willing to buy some shares.

Read more »

Young Black woman looking concerned while in front of her laptop
Investing Articles

ITV shares down after revenue guidance cut in first-half interim results

After releasing results this morning, the ITV share price slumped. But with several metrics looking positive, how will this effect…

Read more »

Investing Articles

This FTSE 100 stock’s down 50%, and a director just bought 8,000 shares

Directors of this blue-chip company have been snapping up a load of its shares. Should I do likewise and buy…

Read more »

Investing Articles

The BT share price is far too cheap, analysts say!

The BT share price fell on Thursday 25 July after the company's Q1 results. Dr James Fox takes a closer…

Read more »

Investing Articles

Is this the start of a stock market crash?

Global stock markets are experiencing some turbulence at the moment. Could investors be looking at a major decline in share…

Read more »