Lithium, the vital element for the production of rechargeable batteries for electric vehicles and other appliances, is the talk of the town these days and the price is definitely on the rise. In which case, a lot of people are trying to jump onto the lithium bandwagon and are looking for ways by which to cash in on the evolving industry.
But market analyst and news anchor Jim Cramer advises caution and recommends just two companies to buy into because of their resilience: Albemarle and Livent.
On Instability and Resilience
Resilience is the key factor as to why the host of CNBC�s Mad Money endorses these two companies for trade. He likes the way these companies handle their lithium holdings and also believes that, because their stock value has been kept down by a turbulent stock market, he sees these as ready to soar upward.
Both Albemarle and Livent have proven their resilience in the face of the global fuel crisis. The two companies are still standing tall and their stocks are performing well despite the ongoing conflict between Russia and Ukraine, soaring inflation rates, China’s perceived dominance in the lithium mining sector, and the aftershocks still being felt from the pandemic.
Cramer added that both Albemarle and Livent’s most recent earnings reports for the latest quarter have surpassed projections and raised their full-year forecasts.
Recently, however, both companies experienced a slight drop in their stock value as the Dow Jones Industrial Average fell by 3.57% on Wednesday, May 18th. The S&P 500 and the Nasdaq Composite also fared poorly, with the former dropping by 4.04% and the latter by 4.73% on the same date. As a result, Albemarle’s stock value is down by 1.36%, while Livent’s fell by 2.13%
Cramer: Don�t Overthink It
Nevertheless, Cramer tells those who want to get into the lithium scene not to overthink it. Instead, the best solution is to already buy into Livent and Albemarle while both companies are doing great and the price of stock remains within a reasonable range.
However, he does advise potential investors to stay away from buying into Standard Lithium, a company that has a reputation for short-selling in the market.
But while lithium is today’s hot commodity, investors ought to remain wary as the increased demand for cleaner alternatives to fossil fuels has depleted the supply of lithium already processed for use in EV battery cells. In fact, the ongoing shortfall has led to a 438% increase in the market price for unprocessed lithium over the course of the last several months.