Are lithium stock valuations overstretched? We ask SIX experts
Link copied to
How quickly things change.
Less than 12 months ago lithium stocks were in the proverbial crapper. Sentiment is now at all-time highs, thanks to increasingly aggressive EV targets, rising lithium prices, and the growing sense there isn’t enough supply to go around.
JP Morgan’s recent recommendation ‘just buy the lot!’ (paraphrased) just adds fuel to an already white-hot fire.
Over the past month almost every stock on our list finishes handily in the green:
|CODE||COMPANY||1 DAY RETURN %||1 WEEK RETURN %||1 MONTH RETURN %||6 MONTH RETURN %||1YEAR RETURN %||PRICE||MARKET CAP|
|VUL||Vulcan Energy||1||33||85||113||2620||15.37||$ 1,654,226,108.73|
|LKE||Lake Resources||4||9||79||108||1771||0.655||$ 686,244,716.01|
|SYA||Sayona Mining||17||41||44||270||1341||0.14||$ 670,469,619.48|
|JRL||Jindalee Resources||-1||17||62||130||857||3.86||$ 208,275,467.40|
|PLL||Piedmont Lithium||-3||19||-4||20||826||0.88||$ 520,239,793.00|
|CXO||Core Lithium||-1||27||80||53||780||0.405||$ 481,388,074.14|
|GLN||Galan Lithium||0||5||32||151||726||1.28||$ 313,987,402.24|
|LTR||Liontown Resources||-1||5||16||128||684||0.98||$ 1,874,371,511.40|
|PLS||Pilbara Minerals||-2||17||61||154||569||2.4||$ 7,108,631,292.00|
|EMH||European Metals||-1||13||28||40||552||1.955||$ 257,582,090.70|
|ASN||Anson Resources||-4||29||57||17||450||0.11||$ 102,839,628.83|
|GXY||Galaxy Resources||-1||15||49||124||357||5.59||$ 2,857,033,398.20|
|ARN||Aldoro Resources||5||4||34||75||340||0.55||$ 42,502,623.98|
|AVZ||AVZ Minerals||2||25||32||22||291||0.25||$ 788,452,306.60|
|AGY||Argosy Minerals||3||21||67||0||213||0.175||$ 212,546,189.68|
|HWK||Hawkstone Mining||19||47||67||25||150||0.05||$ 89,650,000.00|
|PSC||Prospect Resources||-1||-1||33||100||148||0.36||$ 139,986,090.28|
|RLC||Reedy Lagoon||16||38||29||-24||144||0.022||$ 8,930,497.15|
|LIT||Lithium Australia||3||20||25||-3||121||0.15||$ 139,477,929.77|
|MIN||Mineral Resources||-1||-3||4||63||111||59.69||$ 11,382,667,074.42|
|ESS||Essential Metals||-4||48||105||79||105||0.215||$ 53,459,392.50|
|EUR||European Lithium||15||40||61||26||88||0.0885||$ 71,913,041.51|
|LPI||Lithium Power International||0||19||62||10||84||0.34||$ 102,366,363.26|
|TNG||TNG Limited||13||18||35||-6||15||0.085||$ 93,712,278.00|
|INF||Infinity Lithium||0||-1||-18||-60||7||0.099||$ 39,888,541.04|
|AJM||Altura Mining||0||0||0||0||0||0.07||$ 209,037,029.25|
|AAJ||Aruma Resources||9||65||32||-9||-4||0.086||$ 8,370,913.23|
|CHR||Charger Metals||28||165||240||0.73||$ 18,240,000.57|
|LEL||Lithium Energy||3||46||100||0.7||$ 30,600,000.00|
|BMM||Balkan Mining and Minerals||17||22||89||0.705||$ 19,662,500.00|
|GL1||Global Lithium||11||58||58||0.41||$ 32,921,081.52|
|PAM||Pan Asia Metals||-3||16||42||3||0.185||$ 10,195,142.36|
12-month movements are even more pronounced. Check out this list of standout winners over the past year:
Vulcan Energy (ASX:VUL) +2620%
Lake Resources (ASX:LKE) +1771%
Sayona Mining (ASX:SYA) +1341%
Core Lithium (ASX:CXO) +780%
Galan Lithium (ASX:GLN) +726%
Big numbers. Again, just two stocks are in the red over the past 12 months.
We asked the punters — are ASX lithium stock valuations overheated, or does upside remain?
A clear winner emerged.
Are ASX #Lithium stock valuations generally overheated right now, or is there more room to run?
— Stockhead (@StockheadAU) August 12, 2021
Chairman, Far East Capital
“They have run very hard, especially the leaders.
“When stocks move like this, I invariably find they overshoot. So even if they have run too hard, they could still go further.
“I think a sensible person would be taking at least some profits.”
Senior Resources Analyst, MineLife
“Lithium companies are currently being driven by market exuberance, which aligns directly with an underlying surge in lithium prices.
“At some stage market, valuations will run likely run ahead of fundamentals, which means that a correction will be on the cards.
“Ultimately, investors will want to see the sector high-flyers turn their production promise into reality, via project financing and offtake agreements etc.”
GUY LE PAGE
Director, RM Corporate Finance
“I think they are pretty stretched, and upside is going to be very much stock specific.”
WA State Manager, Shaw and Partners
“The lithium price is very strong now, and the thematic around green energy is only getting stronger.
“I just don’t see that theme ever going away.
“Fundamentally you have tailwinds really supporting the sector, but investors should probably be little bit more selective now.
“There are some projects out there that are poor in terms of grade, and poor in terms of location and infrastructure.
“In a normal pricing environment, it will be the low-cost projects that remain and make money.”
Co-founder, VP Capital
“Just my personal view. I think in the long run, the ones that are producing or have a clear pathway to production (financing, permitting etc) will hold up as long as the commodity undersupply persists, which is what’s being forecasted in the industry at the moment and somewhat reflected in a recovery of commodity prices.
“For companies with a less clear pathway to production (eg still early stage explorers or undertaking conceptual plans), they’re more likely to retreat once the commodity cycle stagnates or moves the other way.
“With that said, there is probably more momentum in the very short-term.”
Head of trading, Barclay Pearce Capital
“I would say that there is more room to run in the lithium sector.
“I think, in general, battery metals have more to run as focus on electric vehicles and renewable energy in the future increase considerably and the market adopts a comfortability with the renewable energy and clean technology sectors.”