ALTM - Arcadium Lithium Stock: Patient Investors Will Be Rewarded

2024-05-29 06:38:12 ET

Summary

• There is little doubt about the key role lithium manufacturers will play in global decarbonization efforts, but due to unfavorable macroeconomic conditions, lithium has been in oversupply recently.
• Long story short, almost all the factors that boosted lithium prices to record highs in 2022 have turned the other way around.
• At the current rate of supply additions, the market will enter a supply deficit by 2030, but the level of supply shortage is something experts do not agree on.
• Arcadium Lithium, as a low-cost producer, will see a major acceleration in earnings growth even if lithium prices move a few basis points higher.
• Arcadium's cheap valuation, cost synergies resulting from the merger, and diversified production facilities make it an attractive bet on the expected recovery of lithium prices.

Being an Arcadium Lithium plc ( ALTM ) investor is not easy. There is little doubt about the key role lithium manufacturers will play in global decarbonization efforts, but due to unfavorable macroeconomic conditions, lithium has been in oversupply for over a year, putting downward pressure on lithium prices. There is a lot to like about Arcadium, from its access to low-cost lithium in Argentina to its growing scale, but ALTM stock is likely to go nowhere until lithium prices move higher, or at least stabilize. Even before the merger between Livent and Allkem, I found Livent a very attractive bet based on its access to economical lithium production facilities and cheap valuation....

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