Lithium stocks are probably the most basic way to buy into the...

Lithium stocks are probably the most basic way to buy into the battery sector. These are the companies engaged in the mining, production, and refining of lithium and lithium-based compounds and metals, materials that are absolutely essential to lithium-ion battery technology. While there are other battery technologies available, lithium-ion batteries are far and away the type most used in the most applications, especially in the electronics and automotive industries.

Arcadium is one of the world’s largest lithium producing companies. With its $4.7 billion market cap, and its active operations on a global scale, Arcadium boasts projects in resource exploitation, production, conversion, and mine-to-metal, all in lithium, and all aimed at producing the various forms of lithium required by modern industries. The company has ongoing projects in both North and South America, in East Asia, and in the UK. Arcadium’s North Carolina Bessemer City facility specializes in the production of high purity lithium metal, the only such production facility in the Western Hemisphere.

This company’s name and ticker are new to the New York Stock Exchange, even if the actual business is not. Arcadium, in its present form, was built from a merger-of-equals transaction completed in January of this year. Allkem and Livent, two major lithium companies, combined their business operations to create ‘a Leading Global Integrated Lithium Chemicals Producer.’

Arcadium has a set of premier lithium production and manufacturing sites located at key points in the global lithium supply chain. The company boasts some 2,600 employees and its formative components had $1.9 billion in combined total revenue in 2022, their last full year of separate operations before the merger process started. For 2023, the year during which the companies conducted merger operations, combined revenues came to $2 billion. Arcadium expects to realize between $60 million and $80 million in synergies and cost savings from the merger during 2024.

All of this caught Molchanov’s attention, but the analyst is most impressed by Arcadium’s potential for future expansion. He writes, “While there is no getting around the fact that the day-to-day trading action in all lithium stocks is tied to the underlying commodity, here are three reasons to own Arcadium beyond simply a commodity call. First, with the inaugural guidance for the combined company having come out in February, 2024 is set to be a year of cash flow neutrality, i.e., operating cash flow covering essentially all of the capital spending… Second, capacity expansion points to 2024 volumes posting healthy growth as the year progresses… Third, there should be increasing evidence of post-merger synergies over the next several quarters. Cost synergies are targeted at $125 million per year by 2027.”

The Raymond James analyst recently upgraded his stance on this lithium stock from Outperform (Buy) to Strong Buy, and set a price target of $9, showing his confidence in a one-year upside of 115%.

Amongst Molchanov’s colleagues, 6 others join him in the bull camp, 5 Recommend to Hold and one implores to Sell, all coalescing to a Moderate Buy consensus rating. There’s plenty of upside projected; the shares are trading for $4.19 and their $7.65 average target price suggests an 82.5% gain lying in wait for the coming year.

https://www.tipranks.com/news/article/theres-an-opportunity-brewing-in-these-2-clean-tech-stocks-says-raymond-james?utm_source=markets.*.com&utm_medium=referral