Lithium stocks are back in focus thanks, in part, to EV maker Tesla (NASDAQ: TSLA). This week saw a rebound in the popular EV stock and broader markets. In particular, for Tesla stock, there was more than just selling fatigue at play. CEO Elon Musk said that he had sold “enough” TSLA stock to reach his 10% target.
“I sold enough stock to get to around 10% plus the option-exercise stuff, and I tried to be extremely literal here,” Musk said in an interview with The Babylon Bee.
Traders thought it safe to get back into the EV waters in light of this. This came after a bearish rout that lasted more than a month and took TSLA stock below the mental $1,000 threshold. Many traders have used it as an area of support. Helping add to the momentum, the EV maker not only reported strong sales expectations for Q4 but also announced that it had secured material for battery production in a deal with Austria’s Syrah Resources.
It seems that all of these milestones have brought about sympathy sentiment in other areas of the market, including mining stocks. Casting aside traditional interest as a safe-haven investment, traders appear to have grown bullish on the prospects of energy metals. That seems to have become especially prevalent following Tesla’s latest progress outside of Musk’s stock sale.
Mining Stocks To Watch Right Now
If you look at the Lithium Battery ETF (NYSE: LIT), you’ll see what I mean. Almost in tandem with TSLA stock this week, LIT has bounced back from its December low. Today, we look at a few more mining stocks to watch with that in mind.
- Snow Lake Resources Ltd. (NASDAQ: LITM)
- Rio Tinto (NYSE: RIO)
- Albermarle Corp. (NYSE: ALB)
Snow Lake Resources Ltd. (NASDAQ: LITM)
Recently IPOd Snow Lake Resources has attempted to reclaim its debut price levels this quarter. The lithium mining company’s stock debuted on November 19th, opening at $11.50. Following a brief move to highs of $18.42, LITM stock began its steady decline, which ultimately took it to lows of $4.44 this month. However, with proceeds from the IPO earmarked for development, drilling, exploration, and other project-related operations, attention has been on its next steps.
This month, the company began sampling at its Manitoba project. According to CEO Philip Gross, “The results of this prospecting expedition are incredibly encouraging and affirming of our belief that Snow Lake Lithium sits on one of the most promising resources in North America for lithium supply. Our recent laboratory analysis results would also suggest that our rock is amenable to producing a quality raw material for the battery industry.”
Read more: Are Mining Stocks Right For Me?
In addition, Snow Lake has also secured permitting for winter drilling at the project, which could add to progress heading into the new year. In a letter to shareholders earlier this week, management explained that it looks to 2022 for completing feasibility studies and beginning engineering studies on its mine for hydroxide plant development. With next year promising to be “an incredibly exciting year” for the company, Snow Lake could be one of the lithium stocks to watch right now.
Rio Tinto (NYSE: RIO)
Like Snow Lake, Rio Tinto has also worked on bouncing back from a pullback earlier this quarter. Contributing to the downturn were comments from analysts questioning certain aspects of the company’s current strategy. For instance, J.P. Morgan expressed discontent from details given during Rio’s investor day. The bank said that “Our previous view was that Rio’s iron-ore division was a short-term turnaround story…We no longer view it this way, with our medium-term estimates now reflective of 2H21 performance.”
As a result, the bank cut its $143 price target to $113. In a similar instance, JP Morgan downgraded the mining company to Neutral this month, which was on the heels of a Credit Suisse price target cut resulting from changes to bulk commodity prices.
A deal announced this week may have breathed some new life back into Rio Tinto stock despite the bearish sentiment. The company announced that it had acquired Rincon Mining’s lithium project in Argentina. Rio cited this deal as a show of faith in its commitment to build its battery materials business and strengthen its portfolio for the global energy transition. Rio Tinto Chief Executive Jakob Stausholm said, “This acquisition is strongly aligned with our strategy to prioritise growth capital in commodities that support decarbonisation and to continue to deliver attractive returns to shareholders. The Rincon project holds the potential to deliver a significant new supply of battery-grade lithium carbonate, to capture the opportunity offered by the rising demand driven by the global energy transition.”
With this deal expected to close during the first half of 2022, RIO stock could be one to watch.
Albermarle Corp. (NYSE: ALB)
Thanks to Tesla, the LIT ETF got a boost this week. I say this because the EV company makes up nearly 6% of the fund’s holdings. However, that isn’t the most significant position for LIT. Albermarle Corp. makes up over 10% of the ETF’s holdings, equal to more than $577 million worth of ALB stock.
The company has taken a different approach to the lithium industry. Albermarle produces Lithium, Bromine, and Catalyst solutions. While supply chain issues may have factored into its progress, overall, Albermarle has managed to weather the storm and reported strong earnings with robust guidance this quarter. In particular, the company made decisive steps forward in its lithium business. It achieved its first lithium carbonate production at the new La Negra III/IV conversion facility. Furthermore, the company has also made investments to boost conversion capacity in China, with an initial target of up to 150,000 metric tons of lithium hydroxide per year.
Read more: 3 Top Mining Stocks To Watch Before 2022
With lithium sales for the 3rd quarter increasing 35% from last year’s quarter, Albermarle expects pricing to “increase sequentially due to tightening market conditions.” This obviously could bode well. Analysts seem to agree. The last few weeks have seen the likes of JP Morgan, Berenberg Bank, Deutsche Bank, BofA, Mizuho, and KeyBanc all boost price targets on ALB stock.
Should You Buy Lithium Stocks?
The questions of the day: Should you buy lithium stocks right now? Despite the overall volatility in the lithium market, EV makers alone have made it clear their need for more raw materials. How that translates to stock prices will be seen as the industry continues evolving. These are just a handful of lithium stocks to watch right now. Does a lithium investment have a place in your portfolio? Let us know in the comments.
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