It is fair to say that the lithium industry has been a very difficult place to invest in recent times.
With lithium prices crashing materially over the past 12 months as supply increases and demand softens, a number of ASX 200 lithium stocks have recorded sizeable declines.
While this is disappointing, brokers believe that it could have created a buying opportunity for at least a couple of leading miners.
Let's take a look at which two miners analysts are currently tipping as buys:
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Arcadium Lithium (ASX: LTM)
The first ASX 200 lithium stock that brokers are bullish on is Arcadium Lithium. It is one of the world's largest lithium miners with operations across several geographies and lithium types.
Bell Potter is very positive on the company due to the diversity of its operations. It believes this positions Arcadium Lithium perfectly for when lithium prices eventually rebound. The broker explains:
LTM provides the largest, most diversified exposure to lithium in terms of mode of upstream production, asset locations, downstream processing and customer markets. It is a key large-cap leverage to lithium prices and sentiment, which we expect to improve over the medium term. The group has a strong balance sheet and growth portfolio.
Bell Potter currently has a buy rating and lofty $10.40 price target on the company's shares. Based on the current Arcadium Lithium share price of $6.94, this implies a potential upside of approximately 50% for investors between now and this time next year.
IGO Ltd (ASX: IGO)
Another ASX 200 lithium stock that could be a buy is IGO.
Goldman Sachs is a big fan of the company due to the low costs of its operations. It believes this leaves IGO well-placed to navigate the current environment of low battery material prices. It explains:
Greenbushes is the lowest cost lithium asset in our coverage. Production growth more than offsets increasing strip ratio: The addition of CGP3 (under construction) and CGP4 (planned) should take Greenbushes production capacity from ~1.5Mtpa today to ~2.4Mtpa (excluding tailings processing of ~0.3Mtpa), and they are planned to be funded from existing Greenbushes debt facilities, combined with Greenbushes cash flows (though we factor in below nameplate). We reiterate our belief that further Greenbushes expansion remains one of the most economically compelling brownfield lithium projects.
The broker has a buy rating and a $8.10 price target on IGO's shares. Based on its current share price, this implies a potential upside of 11.5% for investors over the next 12 months.
