Why LTHM Stock Is a Lithium Play With Moonshot Potential
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Livent (NYSE:LTHM) stock represents a global business with a single focus. The company is dedicated to extracting lithium that’s used in handheld devices, lightweight alloys for aircraft, and of course, electric vehicle batteries.
Believe it or not, the company is doing so well that Livent nearly doubled its full-year 2022 revenue guidance. Moreover, LTHM stock could ride higher on the back of a prominent lithium-hydroxide supply deal with General Motors (NYSE:GM).
Make no mistake about it: The current presidential administration strongly supports the American EV industry. Indeed, the White House’s $2.8 billion commitment to support the domestic manufacturing of EV-essential components speaks volumes.
America’s automakers know full well that if they’re going to thrive in the 2020s, they’ll need to source vast quantities to lithium. To that end, one famous automaker, in particular, has struck a big-money deal with Livent. It’s yet another reason to consider taking a long position in this ambitious, revenue-rich lithium producer.
What’s Happening with LTHM Stock?
Having recently broken above the key $30 level, LTHM was a sleeper throughout much of 2022 but seems to be perking up now. Perhaps the Biden administration’s support of America’s battery-metals industry convinced some traders to start loading up on Livent shares.
Or, maybe it was Livent’s undeniably positive fiscal stats. During the company’s most recently issued quarterly financial report, Livent posted astounding 114% year-over-year revenue growth to $218.7 million.
But wait – it gets even better. From 2021’s second quarter to the second quarter of 2022, Livent’s adjusted earnings before depreciation and amortization increased 494% to $95 million. Furthermore, Livent’s GAAP-measured net income soared 823% to $60 million, while the company’s adjusted earnings per share rallied 825% to 37 cents.
Now, that’s what any sensible trader would call mind-blowing growth. Livent’s financials were so strong that the company was compelled to raise its full-year 2022 revenue guidance range by 97%, to between $800 million to $860 million.
In case that’s not enough to keep the bears away, Livent hiked its full-year adjusted EBITDA range by 404%, to a range of $325 million to $375 million.
General Motors Collaboration
After all of those growth statistics, do you still need more positive news for Livent? No problem – a deal struck with automotive giant General Motors ought to convince any remaining skeptics.
This is a multi-year deal in which Livent will supply General Motors with battery-grade lithium hydroxide. Moreover, the lithium hydroxide will be used in General Motors’ Ultium battery cathodes to power a variety of EV models.
The deal with General Motors will span a six-year period starting in 2025. Perhaps this is why LTHM stock isn’t flying too far above $30 yet. Sometimes financial traders have short attention spans and don’t necessarily want to hold a stock for years.
Holding Livent shares beyond 2025 could be a smart move, however. General Motors is committed to supplying a million units of EV capacity by the end of 2025.
With Livent’s assistance, General Motors is at the vanguard of America’s vehicle electrification movement. Over time, this venture could prove to be quite lucrative for both businesses.
What You Can Do Now
LTHM stock hasn’t quite had its moon-shot moment yet. That’s probably because some shortsighted traders aren’t ready to commit to a multi-year buy-and-hold position.
Those traders could end up leaving a whole lot of profits on the table. Livent’s fiscal outlook indicates a powerful growth trajectory. Plus, the company’s deal with General Motors looks like a long-term win-win scenario. So, feel free to take a look at Livent and decide for yourself whether this lithium producer has multi-bagger potential.
On the date of publication, Louis Navellier had a long position in LTHM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.