What a week we’ve just had everyone? With what seems like a bloodbath in the markets,
on the back of Jay Powell’s very strong statement at the recently held Jackson Hole event.
He didn’t say anything new but was very firm that taming inflation, will be data-dependent and they
will continue tightening until long-run inflation moves meaningfully back towards its 2% target.
That in a nut shell means more aggressive interests rates rises,
which didn’t bode well for investors and hence the tanking.
But for us long term investors, I think its worth remaining focused on the opportunities
presented here, especially when they present us with good buy the dips entry points.
And this takes us to our topic of today which is once again about lithium,
as in their latest earnings call, Elon Musk has called for more investment
in global lithium refining to ease shortages in battery materials — and check this out,
he promised those who seize the opportunity that, it’s as lucrative as “basically minting money.”
He said the mining is relatively easy, but the refining is much harder,
but there software-like margins to be made in lithium processing. “So you can’t lose, and it’s
a license to print money.” What a bold statement which you don’t want to take for granted.
So in this video I share with you two of those lithium plays who are well positioned to be
money printers in this space.. So make sure you stick around to the end so you don’t miss out on
these two lithium gems, which are on course to create fortunes in the ev supply chain space.
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That said please drop a quick like on the video and hit the bell, so we can get on with it with
our first stop, which is Livent Corp (LTHM) which is now sitting at at $32.89 per share
and it has since been running with the momentum since we recently covered it at $24 per share and
being up 35% in the last month alone. And when you look at Livent over the longer ytd horizon, you
can see that they are clearly punching towards ytd high. And based on the outlook, it doesn’t seem
like there’s a lot to cool it down. Not even Jay Powell’s interest rate hikes, I don’t think so.
And btw, a decent platform to trade all your lithium stocks in once place
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So here’s what’s new with LIvent, which you need to be aware of.
In the latest quarterly call, Livent updated on the market outlook stating that, demand for
lithium continues to significantly exceed supply, the supply deficit is expected for the foreseeable
future, the current pricing environment is expected to remain at least into 2023.
And you can see how that is translated into their P&L, looking at the right hand side
here, its triple digit growth for Livent from the top to the bottom line and interestingly it gets
bigger and you go towards the bottom line. And when put all together for the 2022 FY guidance,
not only have they upgraded their forecast but it is forecast to double from 2021.
What an outlook here. Analysts are Seeking Alpha say,
Livent is an aggressively Growing Pure Lithium Play. They say Livent is a pure-play lithium
stock, thriving in an industry with robust growth alongside the Electric Vehicle market.
The company has experienced significant growth in the most recent quarter;
and has leveraged the robust growth and is investing in growth initiatives that aim
to more than triple its production capacity by 2030. Wow, an incredible capacity upside here.
Even though Livent Corp. serves various markets, it attributes a significant portion of its demand
surge to the rise of electric vehicles (EV) and other energy storage markets.
The S&P Global reports that US battery manufacturing capacity
is expected to increase tenfold between 2021 and 2025, with companies planning to expand battery
capacity this decade in the US and increase domestic battery production for EV product lines,
including automakers General Motors, Ford, Tesla, and Toyota Motor North America.
Accordingly, Livent's focus on LiOH, an integral part of the most successful Li-ion batteries, has
been increasing, accounting for about half of the company's revenues. This was a primary driver for
Livent's Tesla (TSLA) agreement, which ushered the stock into an upward trajectory in the late 2020s.
On to our next stop, which is Sigma Lithium Corp (Nasdaq: SGML) another gem which we have
been talking about for a while which we first called here on the channel at $9.50
and it has since given us over 100% gains and now sitting at $24.17 and still has a long way to go.
Sigma has been punching hard recently towards all time highs and being up 36% over the last
month alone. Patience is needed for these gems to go through their development cycle
and this one is a gem certainly worth paying attention to. Here’s what’s new.
Sigma reported on their 2nd quarter achievements stating it was a transformative second quarter,
where they significantly increased the scale of their Project: They doubled their planned
near-term production to 531,000 tonnes per year of Battery Grade Sustainable Lithium
and they continued to achieve construction milestones, advancing towards production.
Seeking Alpha says Sigma Lithium: New Phase 3 Could Bring Stock Demand. They say Sigma’s runs
Grota do Cirilo Project in Brazil, a vertically integrated operation is expecting to produce high
purity 5.5-6% battery grade lithium concentrate. Using an ultraconservative price of $1790
per ton, revenue would trend north from $483 million in 2023 to $779 million in 2034.
The company noted a 50% increase in the total mineral reserves
thanks to the new Phase 3 which the market may not have taken into account yet.
Another analyst states that Lithium Refining Prints Money, But we need to Look For Integrated
Plays. They say the integrated lithium producers who can make low-cost lithium carbonate/hydroxide
from mine to shipping will benefit the most from the energy transition and electric vehicles.
Equally interesting here is that many mining companies are very profitable,
even if they don't refine all the way to the level of lithium carbonate
(such as Sigma Lithium (SGML), which plans on producing lithium concentrate,
one level below carbonate or hydroxide). The reason lithium is so profitable regardless is that
there is such a clear supply gap, that is only expected to widen.
And most companies (outside of China) that are involved in lithium refining also have
a hand in the mining business. The largest new lithium development project in the United States,
Thacker Pass by Lithium Americas (LAC). The integrated extraction to lithium carbonate or
hydroxide design seems to be predominant in many new projects as companies sign
offtake agreements directly with the mining companies for lithium carbonate/hydroxide.
Another of such refining companies for your watchlist is Piedmont Lithium (PLL), which
has offtake agreements with several mines for ore
that it plans to turn into 30,000 tonnes per annum of lithium hydroxide.
Another gem to bring to your attention on this topic is Li-Cycle (LICY) looking to be an integral
part of the lithium supply chain. As battery production ramps up, reprocessing the scraps and
end-of-life batteries into new battery-grade materials will be a key source of lithium
(and other metals) that is easily accessible and close to the hubs of battery production.
How exciting??
So some very very interesting and mindblowing prospects ahead for these clean energy stocks but
only consider getting in if the price is right for you and if you fully understand the risks.
This video is not financial advice, a buy or a sell recommendation, but is meant to bring some
new and exciting penny stocks to your attention for you to do your own research.. As always
I would love to hear from you, so please let me know your thoughts on these top penny stocks in
the comments section below and what other penny stocks are catching your eyes lately.
And If you are new to my channel, please ensure to subscribe and hit the bell so you are notified
when I upload new videos. If you would like to see more videos like this, please check out this
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Thank you so much for being here and I look forward to have you in my next video. Thank you