In order to understand cheap lithium stocks to buy for big upside, investors need to understand a few things first. Since we’ve defined these stocks as ‘cheap’, we need to first define what cheap constitutes. All of the stocks on this list trade under $50 per share at the time of writing. Five of them trade for $5 or less.
They also have big upside, as the title suggests. Shares priced under $5 often have big upside. That’s true in this case, with several of these stocks having the potential to triple based on average target prices. Even the highest-priced equity on this list has 100% upside.
So, why are investors interested in lithium? Electric vehicle demand is the answer. Global lithium demand is anticipated to double by 2027 as EV adoption continues its rapid growth. That makes lithium stocks a pick-and-shovel investment.
| EEMMF | E3 Lithium | $1.63 |
| LAC | Lithium Americas | $26.69 |
| LIACF | American Lithium Corp. | $1.44 |
| PILBF | Pilbara Minerals | $3.27 |
| PLL | Piedmont Lithium | $63.80 |
| SLI | Standard Lithium | $3.45 |
E3 Lithium (EEMMF)
E3 Lithium (OTCMKTS:EEMMF) stock is an equity investment in an Alberta, Canada firm that is working alongside the province’s mature oil industry.
The company extracts lithium using what is known as Direct Lithium Extraction technology. In this method, a material absorbs lithium from saline water and the lithium is then extracted with hydrochloric acid. The method is popular in North America and China where evaporation ponds – another extraction method – are less suitable.
Investors should understand that EEMMF stock remains highly speculative. All of E3 Lithium’s CAD$ 49,000 of income in Q1 came from interest. In other words, it isn’t yet producing lithium at commercial scale.
It is trying to commercialize ion-exchange lithium absorption technology and successfully began manufacturing sorbent in late July. An investment in E3 Lithium is a bet that it can commercialize that technology and that a significant market exists for that technology.
Those who take that bet can scoop up shares for $1.60 that have an average target price approaching $8.
Lithium Americas Corp. (LAC)
Lithium Americas (NYSE:LAC) stock is one of the higher-priced equities on this list. It is still relatively cheap as share prices go but on the higher end for this list. That said, Lithium Americas still is among the cheap lithium stocks as shares contain a big upside based on an average target stock price of $35.27.
That upside isn’t as high as other shares on this list, but it’s also an indication of Lithium Americas being further developed, and less speculative, than other shares listed. The company is developing advanced-stage lithium projects in Argentina and the U.S., both of which are moving toward production.
The Argentinian project, Cauchari Olaroz, is 90% complete and is anticipated to produce 40,000 tonnes per annum (TPA) of lithium carbonate. The U.S. project, Thacker Pass, is moving toward construction and is targeting similar initial production levels as the project in Argentina.
The company maintains around $500 million in liquidity meaning it is stable relative to other names here. LAC is a reasonable lithium investment overall with strong upside.
American Lithium Corp. (LIACF)
American Lithium Corp. (OTCMKTS:LIACF) is another stock in a firm advancing lithium production in North America and South America.
Investors should understand that lithium production is at the center of geopolitical tensions, similar to many other commodities. Companies like American Lithium, which produce vital commodities geographically proximal to the U.S., have an advantage.
That’s part of the overall bullish narrative underpinning the company. It is advancing the development of the Falchani hard rock lithium deposit in Peru. And in the U.S., the company owns the TLC clay lithium deposit. That deposit has the strategic advantage of being close to Tesla’s (NASDAQ:TSLA) Nevada giga-factory.
American Lithium has several ways to win. The Falchani deposit boasts an internal rate of return of 19.7%, meaning it should pay for itself in less than five years.
Aside from its lithium assets, the company also controls all of the production of a particular type of uranium in Peru, known as triuranium octoxide. That means the company has a chance in nuclear energy as well.
Pilbara Minerals (PILBF)
Unlike American Lithium, Pilbara Minerals (OTCMKTS:PILBF) stock represents a pure-play lithium mining firm. The company maintains 100% ownership over the Pilgangoora hard rock lithium operation.
Pilbara Minerals is located in Western Australia and is currently producing lithium-bearing ore. In fact, fiscal year 2022 has seen the company take off. The company recorded $973.7 million in revenue during the year. That represented a 456% increase year over year above the $175.8 million in 2021 revenues.
Those rapidly increasing revenues also took the company out of the red. Pilbara Minerals lost $51.44 million in 2021. In fiscal 2022, the company posted $561.82 million in profit.
PILBF stock has a roughly 30% upside. The Pilgangoora mine feeds two processing plants and has a life of 26 years based on current estimates. The company remains highly liquid with nearly $900 million in the bank.
Piedmont Lithium (PLL)
Piedmont Lithium (NASDAQ:PLL) is pre-revenue, yet its shares command a price near $64. That may scare some but the eight analysts with coverage unanimously rate it a buy. And they’ve assigned PLL stock an average target price with nearly a 100% upside.
Piedmont Lithium is developing what it refers to as a world-class integrated lithium business in the U.S. The company is located in the heart of the tin spodumene belt of North Carolina.
Lithium extracted from tin spodumene is low-cost. Low price, combined with North Carolina’s proximity to the lithium industry’s supply chain, has investors excited.
Piedmont Lithium has been very successful at raising equity and then investing that equity into affiliates. It is building a sizeable asset base, valued at $273.05 million, and developing those assets into an America-first lithium business.
It maintains $139 million in assets as cash, allowing it to move quickly. It remains pre-revenue but posted a minor bet loss of $9.5 million in Q2.
Standard Lithium (SLI)
Standard Lithium (NYSEAMERICAN:SLI) stock is priced low at $3.45 a share. It also possesses massive upside with a target price of $14.67 and all three analysts with coverage agree it is a buy.
The company is primarily associated with testing and proving the commercial viability of lithium extraction projects. One, the Arkansas Smackover Project, is attempting to commercialize lithium extraction technology from the area’s proven brine deposits.
The Smackover formation stretches across Texas, Arkansas, Mississippi, Alabama and into Florida. The brine extracted has primarily been utilized for bromine extraction. Standard Lithium is developing a variant of direct lithium extraction to extract lithium from the same reserves.
Standard Lithium is testing its technology at another project located in the Mojave Desert named Bristol Lake.
Like E3 Lithium, listed above, Standard Lithium is racing to develop commercial technology to bring lithium production to scale. If it succeeds, it will be able to extract massive quantities from the Smackover Formation which will justify those high target prices. The firm has the financial resources to continue to approach that goal, so it remains a bet worth considering.
Frontier Lithium (LITOF)
Investing in Frontier Lithium (OTCMKTS:LITOF) stock requires a somewhat longer investment horizon. That’s because the company aims to complete permitting and feasibility studies by 2025 with construction and production occurring thereafter.
Assuming all continues to go to plan, there is strong inherent upside in LITOF stock based on its average stock target price of $4.63. That’s more than 200% higher than its current price of $1.53. Remember, target prices reflect an expectation of where a stock will trade in 12 to 18 months. That means the $4.63 price is an expectation of Frontier Lithium if the company keeps moving toward its 2025 goals.
Frontier Lithium’s resource deposits are located in western Ontario. The area is proximal to the American vehicle manufacturing epicenter in the midwest. That’s beneficial to its future. Further, Frontier Lithium owns lithium-producing resources that can produce two lithium products. That’s relatively rare and gives the company alternative routes commercially.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.