How to Buy Li-Cycle Holdings (LICY) Stock

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Contributor, Benzinga
March 18, 2022
$1.06
-0.04[-3.64%]
Last update: 9:27AM (Delayed 15-Minutes)
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Open1.060Close-
Vol / Avg.7.598M / 8.444MMkt Cap189.790M
Day Range0.850 - 1.07052 Wk Range0.350 - 6.157

You don’t need to look too far to recognize that the international community must cooperate to address and resolve spiraling climate change. From record-breaking forest fires to sustained droughts that threaten to severely undermine water levels in both the U.S. and across the globe, government authorities can no longer ignore these pressing challenges. But merely changing the products we use is just part of the answer.

What modern societies need is a rethink in how they source valuable commodities. And this demand profile brings lithium-ion battery recycling specialist Li-Cycle Holdings’ stock front and center.

When Did Li-Cycle IPO?

Li-Cycle IPO’d on August 11, 2021.

Li-Cycle Holdings Financial History

Just on the basis of sheer size, Li-Cycle Holdings’ public offering is well worth consideration. As the North American market’s largest lithium-ion battery resource recycling firm, Li-Cycle is naturally well-positioned to dominate its industry. Combined with the rapidly expanding relevance of lithium-based platforms and applications, LICY stock could enjoy substantial appreciation.

Primarily, while lithium powers almost everything these days, its extraction “harms the soil and causes air contamination,” according to the Institute for Energy Research. In its report, it found several instances of severe environmental damage. “In Argentina’s Salar de Hombre Muerto, residents believe that lithium operations contaminated streams used by humans and livestock and for crop irrigation. In Chile, the landscape is marred by mountains of discarded salt and canals filled with contaminated water with an unnatural blue hue.”

However, world powers are locked in battle for lithium control and supremacy. As The New York Times explained recently, China is going for an all-out blitz to dominate electric vehicles. Logically, this directive clashes with American and western interests, thereby bolstering lithium demand. Fortunately, Li-Cycle provides a happy medium, with its unique recycling process able to “economically recover core battery grade materials.” Better yet, it can do so “at a lower cost than mined materials.”

Unsurprisingly, the company attracted a wealth of enterprise-level clients, at the time of writing securing over 40 commercial contracts with “blue chip suppliers and off-take agreements through 2030, corresponding to a cumulative forecasted EBITDA [earnings before interest, taxes, depreciation and amortization] between 2021 and 2025 of $985 million.” Further, offtake agreements — a buyer’s arrangement to purchase or sell all or a portion of a producer’s output — with various partners will result in over $300 million of revenue per year.

Li-Cycle Holdings Potential

Appearing on Benzinga’s YouTube show “SPACs Attack,” Li-Cycle Co-Founder Ajay Kochhar stated that despite the devastation of the COVID-19 pandemic, battery demand continued to accelerate. In large part, many battery manufacturers have defective units on their books that need to be recycled. Moreover, Kochhar emphasizes that “batteries are in everything.”

This statement is no more true than in electric vehicles. Powering the green transportation movement, EVs have become much more popular. Based on simple math, this trend will generate several materials that require recycling, an obvious catalyst for LICY stock.

But not so obvious (yet levering a more powerful catalyst) is that EV adoption trends in the U.S. match combustion automobile integration at the turn of the last century. Between 1901 through 1910, automobile units per 1,000 Americans increased to 5.1 from 0.19. Similarly, between 2011 through 2020, EV units per 1,000 Americans rose to 5.3 from 0.07. The correlation coefficient between these two trend lines is 98%, an almost perfect direct relationship.

Li-Cycle Holdings IPO

In other words, the EV rollout today is akin to the invention and early sales of the automobile. Clearly, this circumstance opens incredible opportunities for EV manufacturers — as well as gut-wrenching risks. There’s a reason why automakers like Winton, Packard and Stearns are museum collectables. Invariably, many EV competitors will sprout up over the next several years and most will fail. With LICY stock, you’re betting on the infrastructure of EVs, not a specific brand.

To be fair, no one knows what long-term effect the pandemic will impose on EVs. What is certain, though, is that government bodies everywhere are pushing for clean transportation solutions. Ultimately, this dynamic puts Li-Cycle in the driver’s seat, feeding demand effectively and efficiently.

How to Buy Li-Cycle Holdings (LICY) Stock

If you know how to buy stocks, you can jump right in. If not, follow these steps.

Step 1: Pick a brokerage.

While in prior generations investors focused on platform cost, presently, brokers distinguish themselves through mobility and access.

Below is a list of best brokers to choose from.

Step 2: Decide how many shares you want.

Risk management is crucial for investing success. Make sure to choose a balanced share count, one that gives you satisfactory financial rewards during upswings but won’t devastate during bearish cycles.

Step 3: Choose your order type.

Before placing your bet, review the below market concepts.

  • Bid: The maximum price a buyer will offer, the bid is always lower than the ask.
  • Ask: The minimum price a seller will accept, the ask is always higher than the bid.
  • Spread: The bid-ask price difference, the spread also signals market liquidity and risk, with narrower spreads featuring higher liquidity and lower risk. The opposite is true for wider spreads.
  • Limit order: Limit orders are transaction requests at specific prices, offering price transparency but no execution guarantees.
  • Market order: Conversely, market orders guarantee fulfillment but at the prevailing rate, which prevents full pricing transparency.
  • Stop-loss order: A risk-mitigation mechanism, a stop-loss order automatically exits your position at either a predetermined price or any price lower.
  • Stop-limit order: Removing pricing ambiguities, stop-limit orders only execute at a predetermined rate. Beware that such orders carry the same nonfulfillment risk as limit orders.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select your action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Apply the same sequence for limit orders (include your execution price).

Selling Tickets Rather than Buying Outcomes

Though the EV rollout promises a paradigm shift in transportation, investors have no guarantees which specific brand will deliver the goods. Crack open a history book and it’s littered with previously innovative firms that could not keep pace with technology’s trajectory. But with Li-Cycle, you don’t have to worry about gambling on an outcome. Instead, you’re investing in the platform, which is a much more palatable proposition.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.