Picking up stock in emerging green companies appears to be a logical financial move. After all, climate change has prompted a global shift to renewable energy and manufacturers are assured growth, right? Well, not so fast.
The fact of the matter is that makers of green products have been just as subject to economic volatility as many other industries. If you look at just a short-list of solar energy outfits that went belly up, you begin to wonder how companies in a surging sector could fail so regularly. If you look back less than 10 years, hundreds of seemingly healthy solar outfits went bankrupt. Under the green-friendly Obama Administration, companies defaulted on upwards of $4 billion in Department of Energy loans. Even the Obama-endorsed Solyndra project failed.
This isn’t to say that some political football was fumbled. Far from it. The point is that green companies must slug it out in a highly competitive marketplace. That means upstart outfits in a relatively new niche suffer a high failure rate. Green may be the sexy color to wear, but you could end up losing the shirt off your back adorning such stocks. But, again, this isn’t to imply that the green industry doesn’t have legs — quite the opposite, in fact. For every hundred debacles, there are tremendous success stories. In terms of investments, picking winners and losers in renewables is simply a big gamble.
Consider underlying factors about this market against, say, automobiles. If you were to pick up stocks in Volvo or Ford, those might be stable investments. A new car company, maybe not so much. But the thing that even a new and old automaker has in common is the materials.
In the green sector, batteries are the primary ingredient that every solar roof, car or green friendly device requires. The better the battery, the more competitive the product and this principle has extended to most electronic devices. The one thing all these advanced batteries need is Lithium.
Lithium batteries are long-lasting, energy efficient and comprise the nucleus of the green sector. Solar car companies may come and go, but lithium mining outfits are here to stay. And, the growing demand for lithium makes top mining stocks a low-risk investment.
These are some of the top lithium mining companies and how they are faring in the marketplace:
Albemarle: Based in North Carolina, this lithium outfit has been touted as a solid long-term investment. Albemarle positioned itself to take full advantage of the lithium boom after acquiring Rockwood Holdings and Rockwood Lithium back in 2015. It has a deal in place with Chile’s Development Agency to uptick lithium production and there’s an expectation that the stock could climb through 2020. A 5-year look has Albemarle trading at $65 in February of 2013 and $114 in February of 2018, with a peak of $140 in 2017. The American outfit was hit hard during the 2018 market correction but appears to be rising again.
Advantage Lithium: With corporate headquarters based in Vancouver, Canada, AL has demonstrated viability as an upstart lithium producer. The outfit has positioned its field mining operation adjacent to top mines such as Lithium Americas. Chinese organizations have taken stakes in AL as the Asian giant continues to see a rising lithium battery demand. There’s also talk that China wants to push forward and make 10 percent of its automobiles electric in the next few years. That move requires an abundance of lithium for the batteries. The 5-year stock growth runs from 38 cents in February of 2013 to $1.19 in 2018. Like Albemarle, AL saw a peak in November of 2017, but ramped up to its top number of $1.32 on January 26, 2018. It also took a hit during the market correction but appears to be rebounding nicely.
Sociedad Química y Minera de Chile: Based in Chile, this global outfit is considered an industry powerhouse. Its wares include iodine, commercial chemicals and it ranks among the top lithium producers in the world. Although SQM’s portfolio appears to be trending upward on several fronts, it fails to show a strong 5-year yield. If we look at February of 2013, SQM traded at $54.78 and after significant down time, it comes in at only $56.65 following the market correction. At its best, SQM stock only hit $63.07. But, the good news is that peak occurred just before the market correction dip. This may be a good stock to keep an eye on.
Other lithium producers that are worth tracking include Australia’s Orocobr, Galaxy Resources, and Lithium Americas.
Regardless of whether trendy picks such as Tesla win or lose, until something replaces the demand for lithium, raw materials rock.
Regards,
Ethan Warrick
Editor
Wealth Authority
