News flash: Lithium Americas (NYSE:LAC) just divided into two companies. This is a big deal if you’re bullish on the market for electric vehicles (EVs) and the lithium that EV batteries will use. I am bullish on LAC stock as well as another brand-new stock that just arrived on the U.S. stock market, which I will reveal to you today.
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As the company’s name suggests, Lithium Americas mines for lithium in the Americas, but a recent business separation makes it more complicated than that. Don’t worry, though, as I’ll break it down for you and let you know how I feel about Lithium Americas’ growth prospects.
We’ll also find out that Lithium Americas doesn’t have a ton of analyst coverage, but the analysts that do cover the company are generally quite bullish on it. At the end of the day, you might be convinced to consider not just one but two different stocks in the high-conviction lithium mining sector.
Lithium Americas May Get $1 Billion in Government Funding
Make no mistake about it – the U.S. government doesn’t want to be in last place in the global race to promote clean energy initiatives. Consequently, it makes sense that federal dollars will be allocated toward lithium production projects in order to extract essential lithium for EVs.
Even with that in mind, however, you might not have expected this news item. Reportedly, the U.S. government is considering a “record” $1 billion loan for a Lithium Americas mine. More specifically, the U.S. Department of Energy is negotiating the terms of an agreement that would lend a whopping $1 billion to Lithium Americas to fund more than half of the cost of the Nevada-based Thacker Pass mine.
As you might expect, LAC stock jumped on this encouraging development. If the deal goes through as planned, the billion-dollar loan would be the biggest one that the U.S. Energy Department has ever awarded to a mining company. Moreover, a Reuters report suggests that the Thacker Pass project has the “potential to be North America’s largest source of lithium” for EV batteries and would support the U.S. administration’s “efforts to reduce dependence on Chinese supplies for the metal.”
Lithium Americas Splits in Two – but That’s Not a Bad Thing
Along with the potential $1 billion loan, there’s another lithium industry news item that’s grabbing the headlines. Just today, we learned that Lithium Americas has finalized its plans to separate into two companies – Lithium Americas (NewCo) and Lithium Americas (Argentina).
Again, the names give an indication of what’s happening. Lithium Americas (NewCo) will focus on the Thacker Pass asset, aiming to commence lithium production there by 2026. Meanwhile, Lithium Americas (Argentina) will concentrate on its ~45% stake in the Argentina-based Cauchari-Olaroz lithium brine asset as well as other deposits. Notably, Lithium Americas (Argentina) already initiated lithium production from the Cauchari-Olaroz asset in June.
Not only do U.S. investors have two companies to learn about now, but they also have two different stocks to consider. Specifically, Lithium Americas (NewCo) will retain the LAC stock ticker symbol, while Lithium Americas (Argentina) will trade under the ticker LAAC.
I’ll admit that it’s too early for me to make any judgments about Lithium Americas (Argentina) and LAAC stock. However, I envision a bright future for Lithium Americas (NewCo), and evidently, so does the stock trading community. Believe it or not, LAC stock jumped by 21% today.
In addition, Evercore ISI analysts reiterated their Outperform rating on the shares, so I’m feeling even more bullish about Lithium Americas (NewCo). Speaking of analyst coverage, let’s see how Wall Street generally feels about LAC stock.
Is LAC Stock a Buy, According to Analysts?
On TipRanks, LAC comes in as a Strong Buy based on six unanimous Buy ratings assigned by analysts in the past three months. The average Lithium Americas price target is $29.67, implying 152.3% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell LAC stock, the most profitable analyst covering the stock (on a one-year timeframe) is Puneet Singh of Eight Capital, with an average return of 75.85% per rating and an 83% success rate. Click on the image below to learn more.
Conclusion: Should You Consider LAC Stock?
It may be too early to trade LAAC stock with confidence, but risk-tolerant traders can make their own decisions about that. For now, I’m choosing to focus my attention on Lithium Americas (NewCo), especially in light of the possible $1 billion loan from the U.S. government.
Still, it’s exciting to learn about the growth potential of two different companies with a single purpose – to get much-needed lithium out of the ground. Thus, even after its big rally today, I’m still bullish on LAC stock and feel that enterprising investors should consider a long position in the stock.
