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Lithium Americas Gives Investors Indirect Exposure to the EV Market

Ready to capitalize from the electric vehicle (EV) revolution of the 2020s? Sure, you can buy shares of EV manufacturers. But you can also take a position in Lithium Americas (NYSE:LAC) through a buy-and-hold strategy with LAC stock.
Sou…

Ready to capitalize from the electric vehicle (EV) revolution of the 2020s? Sure, you can buy shares of EV manufacturers. But you can also take a position in Lithium Americas (NYSE:LAC) through a buy-and-hold strategy with LAC stock.

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Think about it: as more EVs are produced, more lithium will be required. One commentator even went so far as to call lithium “white oil” as it’s an essential component of rechargeable EV batteries.

In other words, LAC stock offers a way to indirectly invest in EVs without having to pick and choose within the ultra-competitive automaker market. Still, there are risks involved. Lithium Americas is a mining company. That can be a tough industry to make money in.

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However, Lithium Americas isn’t just any run-of-the-mill mining business. The company has prime lithium assets. LAC also just effectuated an acquisition which could greatly enhance its value proposition.

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A Closer Look at LAC Stock

The story with LAC stock is still unfolding and has gone through several chapters.

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In the first chapter, the stock went sideways from April to August of 2021, clinging to the $15 area. Then, in the second chapter, the Lithium Americas share price soared through the end of November. At one point, it topped out at $41.56.

This, unfortunately, was followed by a disappointing third chapter. December 2021 and January 2022 were particularly challenging. LAC stock ended up near $28 in mid-February.

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What will the next chapter bring? There’s no way to know without a crystal ball, but $15 does appear to offer support, if not a guaranteed floor.

In any case, we can hope that LAC stock doesn’t go all the way back to $15. If it does, though, that would provide a second chance to get into the stock at a great price point.

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An Expanding Market

With a little bit of digging, it’s not difficult to find data points to fortify the bullish thesis for lithium. According to the U.S. Geological Survey (USGS), global mined lithium production reached 100,000 metric tons in 2021. That’s a record high and 21% higher than 2020, which reached 82,500 metric tons.

Meanwhile, Fortune Business Insights expects the global EV battery market to increase from $27.30 billion in 2021 to $154.9 billion in 2028. The market is predicted to exhibit a compound annual growth rate (CAGR) of 28.1% from 2021 to 2028.

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All of this is bullish for LAC stock, of course. The company is sitting on two prime, potentially lithium-rich properties.

First of all, the company has 44.8% ownership of the Cauchari-Olaroz project in Argentina. This project has annual production capacity of 40,000 tons of lithium carbonate. In addition, Lithium Americas has a 100% stake in the Thacker Pass project located in Nevada. The Thacker Pass project has a very impressive annual production capacity of 60,000 tons of lithium carbonate.

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Strengthening the Asset Base

In case all of that isn’t enough to convince the skeptics of LAC stock, Lithium Americas also just acquired an ambitious lithium miner in Latin America. That miner is called Millennial Lithium and owns the Pastos Grandes lithium brine project located in Salta, Argentina.

All told, Millennial Lithium controls more than 20,000 hectares of land in the “Lithium triangle.” This region, according to the company, is “home to the world’s most prolific lithium riches.”

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Lithium Americas assured that it will provide details regarding the development plan for the Pastos Grandes project over the coming months. President and CEO Jonathan Evans declared that, with the completion of the acquisition, the company has “greatly strengthened” its “asset base and growth pipeline in Argentina.”

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The Bottom Line on Lithium Americas

There’s nothing wrong with investing in EV manufacturers. At the same time, however, there’s an indirect way to capitalize on the vehicle-electrification revolution.

LAC stock could go to $15 and that would present a terrific buying opportunity. Even at its current price, though, the stock looks like a bargain.

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So, now we’ve discovered an easy way to potentially profit from the rising demand for lithium. In the long run, the need for lithium in EVs should greatly benefit Lithium Americas and its early shareholders.

On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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