Why These Lithium And Cobalt Companies May Be The Ultimate Contrarian Play

Lithium and cobalt companies are a hidden gem in the mining sector. Lithium and cobalt, along with nickel, are the primary metals used in most modern batteries.

42% of the world’s cobalt production goes toward the creation of Lithium-ion cell batteries.

According to the Cobalt Institute, lithium-ion batteries have higher energy density than other battery types and are used in laptops, smartphones, medical devices, and electric vehicles, in addition to having a number of other industrial applications. Needless to say, the need for lithium and cobalt won’t be diminishing anytime soon.

While an initial spike in prices led to investor euphoria in 2017, that euphoria quickly faded as prices corrected sharply in 2018 and into 2019. But there is evidence to suggest that a huge boom in the battery metals may still be just around the corner. If so, this could be an excellent opportunity for contrarian investors to start accumulating shares on the cheap.

Before getting into two of the best lithium and cobalt stocks in 2019, let’s briefly examine the case for an imminent increase in demand for lithium and cobalt. 

Lithium and Cobalt Demand Set to Surge

With the proliferation of smartphones and electric vehicles, demand for lithium and cobalt has become entrenched in the global economy. And over the next 5 years, it seems almost certain that increasing amounts of lithium and cobalt will be needed for producing batteries.

Benchmark Mineral Intelligence Managing Director Simon Moores told the US Senate in February 2019 that he sees global cobalt demand rising fourfold by 2023 and higher still by 2028. This estimate factors in the potential decrease in demand resulting from companies like Tesla seeking to reduce reliance on cobalt in their batteries in order to reduce supply-side risks.  

Moores’ report puts into perspective the dramatic increase in production of lithium-ion batteries:

“The advent of electric vehicles (EVs) and the emergence of battery energy storage has sparked a wave of lithium ion battery mega factories being built. Benchmark Mineral Intelligence is now tracking 70 lithium ion battery mega factories under construction across four continents… in October 2017, the global total was at 17.”

That one little factoid is all anyone really needs to know in order to get the picture of increasing demand for lithium and cobalt. The question for investors then becomes: what small-cap lithium and cobalt companies are in a position to capitalize on and profit from this trend?

Two Lithium and Cobalt Companies with Promising Futures

Lithium Americas (LAC) has a lithium project in Argentina and another in Nevada. They have seen increased investor interest lately and the share price has started to move higher. Someone has been buying shares of LAC as if they know something the rest of the world doesn’t.

1 2 3 4
View single page >> |

If you are interested in getting free updates with our investment research and trading ideas, click here.

Disclaimer: I am not an investment ...

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.