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With growing demand for electric vehicles, lithium will remain a hot commodity. For one, supply can’t keep up with demand. In fact, according to Stellantis CEO Carlos Tavares, there’s not enough lithium to go around.
“We know that we need lithium. We know that we are not producing as much as we need. We have right now 1.3 billion cars (that are) internal combustion engine powered on the planet. We need to replace that with clean mobility. That will need a lot of lithium. Not only the lithium may not be enough, but the concentration of the mining of lithium may create other geopolitical issues,” he said, as quoted by The Detroit News.
That being said, here are a few ways to trade the lithium boom.
Albemarle (ALB)
No list of hot lithium stocks is complete with the 800 lb. gorilla Albemarle. Helping, UBS analysts just upgraded the stock to a buy rating, with a price target of $225. Even Benchmark just said ALB is the best “growth opportunity.” All with ALB sales expected to grow about 12% a year between now and 2025, with EV growth and all things green.
UBS upgraded ALB to a buy rating, with a price target of $225. Baird also boosted its price target to $228. All because lithium shows no signs of cooling off. Better, Albemarle is now working with Ford Motor to deliver battery-grade lithium, which could lead to the development of about three million Ford EV batteries.
CEO Kent Masters even bought 5,470 shares for an average price of $181.64 in early May for just under $1 million. The CEO now holds more than 51,000 shares of Albemarle stock worth almost $10 million.
I have often said that no one knows with any certainty the long-term direction or duration of the stock market. The longer the time frame, the less certainty there is. Even on a day-to-day basis, there is no certainty. We often look to certain patterns to reproduce themselves, but news events, earnings, company announcements, upgrades, and downgrades always make anticipation of market moves a risky business. If you think the stock market will always go up, look at the last few years. Years of profits can be taken away in 18 months. What if it takes 40 years to return to those levels? At that time, they can once again say that the trend is always up, but will that be meaningful to you? Look at Japan over the last 20 years. Nothing can be taken for granted.
So why do we study pattern? What can we gain if all the study in world still falls short of any kind of certainty? There are very valid reasons to keep an eye on the direction of the market and individual stocks.
First of all, while even the short term (three to five day) outlook cannot be predicted, certain patterns do give us the low risk entries to strategies we use. Take for example a market or stock that has been in an uptrend (we can always define and find the trend by looking at charts and the history of prior price action) and pulls back for a few days to an area of support.
First off, I wish many if not most of you a happy Father’s Day. I’m hoping to get an electric razor from one of my kids. More on that later.
Speaking of “later”, trading begins later this upcoming week as Monday is a Market Holiday. The new as of last year Juneteenth Federal Holiday will be celebrated this year on Monday 6/19.
Often I complain about a holiday because it gives me just four days to do five days’ worth of work. Except there’s not much on the Economic Calendar and Earnings Season is all but over with this exception:
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