As lithium prices bounce, analysts love these stocks — giving one 155% upside

Published Tue, May 2 20238:04 PM EDT

After a tough few months, lithium — a battery metal crucial in electric vehicles — is back in the spotlight as prices start to rebound. Lithium futures on the LME were down over 45% year-to-date early last week, according to CNBC analysis, and well off their record highs seen in late 2022. By the end of last week, however, lithium prices had started to bounce back. It comes as Chile, the world's second-largest lithium producer, moves to nationalize the sector , sparking a rally in the share price of miners as excess supply fears eased. "Chile, holder of the world's largest reserves, has a new policy requiring state involvement for new lithium projects and the use of environmentally friendly processing that is still unproven on a commercial scale. This could delay the delivery of its pipeline of projects," said ANZ Research in an April 28 note. Battery-grade lithium carbonate prices in China rose around 10% on the week to trade around 182,500 yuan ($26,380) a metric ton Friday, according to Refinitiv data. That was the first weekly increase since Nov. 2022, when the metal was trading at 600,000 yuan per ton — more than 200% higher than current prices. "Lithium prices in China gained for the first time this year on signs demand growth may be finally gathering pace … [and] amid thinning inventories across the supply chain," the ANZ Research analysts added. Meanwhile, Corinne Blanchard, clean tech equity analyst at Deutsche Bank, told CNBC's "Street Signs Asia" last week that she expects there to be a shortage of lithium supply versus demand over the coming years. For investors looking to play the EV-related sector, CNBC screened the Global X Lithium and Battery ETF — still down 20% since November — and the Amplify Lithium & Battery Technology ETF for stocks with buy ratings from over 70% of analysts covering them, and average price target upside of at least 15%. Canadian miner Sigma Lithium stood out for getting the highest potential upside from analysts at 155%, and a buy rating from 75% of analysts. Stocks that received a 100% buy rating included American EV battery maker Microvast Holdings and Australian miner Piedmont Lithium . Microvast also got 100% average potential upside from analysts. Meanwhile, South Korean battery maker LG Energy Solution and chemical company LG Chem were two global socks that appeared on the list.