5 Best Lithium Stocks ASX 2022 [Australian Lithium Stocks]

Best lithium stocks ASX

Henry Fung

Henry is a co-founder of MF & Co. Asset Management with over 15 years of experience as a trader, investor and asset manager. Henry runs the Options Income Strategy and has a free 5-day options income strategy course you can take to learn how to use options to generate income.

April 22, 2022

Please note that any research that we publish does not take timing into consideration. We may publish research for a stock that we believe is of good quality but not necessarily trading at a discount or at a technical level for a high probability entry. If you would like to maximise your returns with optimised entry, exit and stop loss levels, check out our High Conviction Report.

Today, we will look at some of the best lithium stocks on the ASX 200 to buy for 2022. These Australian lithium stocks have great leverage to one of the fastest growing sectors in Australia.

Lithium is a massively growing industry with the advent of clean energy and the move towards decarbonisation.

Lithium demand is expected to grow 9-fold by 2030 and is one of the hottest sectors on the ASX right now.

However, Australian lithium stocks tend to be in their infancy, with most mines just going into or growing production.

They tend to be higher risk and priced at a higher multiple and are generally driven by the potential that they have, leveraged to the clean energy industry.

However, having exposure to the best lithium stocks on the ASX will give your portfolio a lot of strong potential upside as the world moves towards decarbonisation.

The Best Lithium Stocks on the ASX in 2022

The hardest part about investing is the ability to process a large amount of information and factors to be able to navigate the macroeconomic and fundamental environment to find the best lithium stocks.

Our Research team has been hard at work uncovering the best Australian lithium stocks on the ASX in 2022 on a macroeconomic and fundamental basis.

We’ve outlined 2 stocks that we have found to either have good growth potential or a great story and what we consider to be some of the best lithium stocks on the ASX.

We believe these represent some of the best lithium opportunities the ASX has to offer.

Ioneer (ASX:INR)

Ioneer (ASX:INR)

Ioneer (ASX:INR) aims to be a world-class lithium producer supplying the burgeoning EV and battery market in the USA.

The company’s facility will be located in Nevada at the Rhyolite Ridge which holds the largest known lithium and boron deposit in North America.

Though ecological issues at the site have made news, the company is positive it can work with the relevant authorities to reach a solution.

The company has been a major beneficiary of the tailwind behind electrification due to climate awareness and record-high fuel prices, the Biden administration’s inclination towards decarbonization, and the DOE’s (Department of Energy) willingness to help fund projects that align with this policy.

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Read the full research article on how Ioneer (ASX:INR) made our best lithium stocks ASX 2022 list.

Mineral Resources (ASX:MIN)

Mineral Resources ASX:MIN

Mineral Resources Ltd. (ASX:MIN) is a large, integrated Australian mining company with a significant market presence in both mining services/infrastructure and the production of commodities such as lithium and iron ore.

The company has enjoyed excellent business conditions in recent times in mining services, while its commodities business was hit by the correction in ore prices in the second half of 2021.

Its fortunes were, however, buoyed to some extent by a burgeoning lithium market.

It has three major divisions: Mining services, where the company is a contract service provider for mines owned by other companies; Commodities, where the company is an owner, producer, and processor of iron ore and lithium products through Joint Ventures and complete ownership; and lastly, Energy Resources, the company’s natural gas division that owns a production site to provide stable and emission-free energy to its client and own production sites.

Read the research on why Mineral Resources (ASX:MIN) is one of the best Australian lithium stocks in 2022.

Core Lithium (ASX:CXO)

Core Lithium (ASX:CXO) is an Australian mining company aiming to become one of the biggest exporters of lithium to the Asian region.

The company has seen its stock skyrocket a monumental 887% over the past 12 months due to the ever-increasing price of lithium and substantial progress towards the commencement of production.

The company claims it will be one of the lowest-cost lithium spodumene producers in the world once its Finniss mine enters production.

The project is also highly capital-efficient, given that its production is based on the simple DMS process which uses just gravity and water.

This is two-thirds cheaper compared to the floatation process.

Moreover, the Finniss project is now fully funded.

The company will potentially enter production in 2H’FY22 and produce about 197,000 mtpa.

Read the research on why Core Lithium (ASX:CXO) is one of the best Australian lithium stocks in 2022.

Pilbara Minerals (ASX:PLS)

Pilbara Minerals (ASX PLS)

Pilbara Minerals Ltd (ASX:PLS) is one of Australia’s biggest listed pure-play lithium mining players.

The company has lately been in the limelight due to the solid rally in its stock and its recent acquisition of Altura Mining for $175M.

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The deal is a good fit for Pilbara Minerals because Altura’s Pilgangoora mine is adjacently located, making the acquisition easy to integrate and generate economies of scale.

Pilbara Minerals was also recently inducted into the ASX200, Australia’s flagship index.

The company’s stock has been having a great run being front-and-centre of the decarbonization megatrend, a thematic investor favourite.

Read the full research article on how Pilbara Minerals (ASX:PLS) made our best lithium stocks ASX 2022 list.

Piedmont Lithium (ASX:PLL)

Piedmont Lithium (ASX:PLL)

Piedmont Lithium (ASX: PLL) is developing a mine for lithium hydroxide and its byproducts.

The stock has benefited from the recent market rally in tech and clean energy stocks because it is linked to the rising popularity of EVs. Lithium is core to the batteries used in EVs and for grid storage.

It is also used in the batteries of laptops and cell phones, as well as in the glass and ceramics industry.

The company has also inked a deal in September 2020 to supply one-third of its spodumene production to Tesla.

Additionally, the lithium industry is expected to grow 37% YoY.

Read the research on why Piedmont Lithium (ASX:PLL) is one of the best Australian lithium stocks in 2022.

Bonus Stock: Magnis Energy Technologies (ASX:MNS)

Magnis Energy Technologies (ASX:MNS)

Even though Magnis Energy Technlogies (ASX:MNS) is not a lithium producer, the company is a battery maker that is further up the chain and uses lithium as an input.

Exposure to Magnis could give your portfolio some diversification away from lithium whilst still givning you good exposure to the move towards clean energy.

Magnis Energy Technologies is an Australian company involved in the development of cheap and nearly 100% recyclable batteries that address the global decarbonization megatrend.

Magnis Energy Technologies is developing its product through strategic partnerships to garner expertise in various segments of the battery value chain.

Its proprietary battery is claimed to outperform current technologies while being cheaper and environmentally friendlier.

The company also has great verticals, with an investment in a high-quality long-life mine.

Read the full report on how Magnis Energy Technologies (ASX MNS) made our best lithium ASX 2022 list.

How We Find The Best Lithium Stocks To Buy

In general, the markets and stocks are firstly driven on a short-term basis via supply and demand imbalances.

This is the order flow on a day to day basis as investors buy or sell shares for different reasons.

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This order flow is generally hard to forecast and requires strong technical analysis and understanding of the underlying market to properly time.

Australian lithium stocks are particularly hard to forecast on a technical basis. This is because most lithium miners and producers are still in the ramp up stage and are smaller capped. This means that institutional investors tend to stay away from them due to investment mandates and general lack of liquidity.

With the lack of institutional investors, the best lithium stocks tend to be driven more by rumours and retail investors. The lack of liquidity is also an issue.

Secondly, markets and stocks are driven by macroeconomic forces in the medium term.

Factors include but are not limited to changes in interest rates, consumer sentiment, government policies and so forth.

Understanding the nuances and how the different countries interact with each other in terms of trade and politics is key to understanding the forces that drive the markets as a whole.

Australian lithium stocks tend to be too highly influenced by macroeconomics and in particular, geopolitics as mines can be located in different countries and jurisdictions.

The best lithium stocks tend to be more qualitatively valued rather than quantitatively valued. In other words, Austrailan lithium stocks are valued on speculation as to the potential non-existent growth and earnings rather than what they are earning today.

However, the macroeconomic environment is still vastly important.

Understanding what they are selling, who they are selling to and who their established competitors help us understand the potential growth the company has.

Finally, stocks in the long term are driven by fundamentals.

Factors include but are not limited to quantitative factors such as earnings growth, profit margin and return on equity.

Qualitative factors include factors such as competition, operating environment, political and policy environment.

Fundamentals are highly important as we make assumptions and valuations based on the environment they will be operating in the future.

In unstable or highly regulated environments, understanding the potential pitfalls is the difference between buying a small cap stock with potential and one that is doomed to fail.

To be able to pick the best lithium stocks to buy, it is essential to combine market timing, macroeconomic and fundamental analytics.

Keep in mind that we publish research on stocks that are not necessarily trading at a discount or at a preferable technical level. If you want to maximise your returns by optimising your entry price, exit price and stop loss level, check out our High Conviction Report.

Are you still looking for the best stocks to buy in 2022? We’ve put together a free report on 5 stocks that we think are the best buys on the ASX right now. Download it instantly here.

This is general advice only. MF & Co Asset Management has not considered your personal financial needs, objectives or current situation. This information is not an offer, solicitation, or a recommendation for any financial product unless expressly stated. You should seek professional investment advice before making any investment decision.

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