MoneyTalks: These lithium stocks are running hot on trading platform Stake
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MoneyTalks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to hear what’s hot, their top picks, and what they’re looking out for.
Today we hear from trading platform Market Insights Editor Stake Eliot Hastie.
Even before last week’s interest rates hike, Hastie said investors had started to move away from the riskier tech stocks like Zip (ASX:ZIP) and Sezzle (ASX:SZL), towards more established stalwarts like BHP (ASX:BHP) and Macquarie (ASX:MQG) .
“It’s clear that blue-chip stocks are making a comeback as investors look to dial down risk in favour of long term returns,” Hastie said.
Last week RBA Governor Philip Lowe hinted that future rate hikes would be slower, but Hastie said it sounds like there’s some way to go until interest rates peak.
“Given current sentiment, and a move towards dollar cost averaging, we can’t see the cautious investing approach going out of fashion any time soon,” Hastie said.
“As investors become more cagey, trusted brands such as BHP and Fortescue (ASX:FMG) are near the top of our most traded list, along with broad-based ETFs and the Big Four banks.
Despite the doom and gloom, Hastie said Stake investors are still looking to megatrends of the future with huge belief in the lithium sector. He said ASX lithium stocks are proving popular with investors.
“This is backed by a swathe of analysts, most notably JP Morgan, which recently upgraded its forecasts for spodumene – a mineral that Australia has in abundance – due to tight supply,” he said.
Hastie said Core Lithium is a Stake investor favourite, with it being a standout for lithium investors.
“The company was up at near-record highs earlier in August before a brief sell-off later in the month, but it’s begun to rebound due to positive sentiment for the EV sector, supported by a report from the Federal Chamber of Automotive Industries that shows Australian EV sales are at their highest ever level,” Hastie said.
“Looking at things globally, General Motors has revealed its plans for an EV model that costs under US$30,000, which would significantly expand accessibility and increase lithium demand.
“This bodes well for Core Lithium as it targets production of spodumene concentrate, a key component of EV batteries, by the end of the year.”
He said Core Lithium has also increased its mineral resource estimate for its wholly owned Finniss Lithium Project, which has been received positively by investors.
The company also announced it had ‘mutually’ agreed to extend the termination date for its binding offtake term sheet with Tesla to October 26.
The Core Lithium price is up ~152% year to date.
Hastie said Lake Resources is also feeling the effects of positive investor sentiment for the EV space, but its management changes have really helped to shift the dial.
“The lithium developer announced that industry veteran David Dickson would be made CEO later this month, bringing over 30 years’ of experience,” he said.
“Dickson is expected to fast-track the company’s American operations to advance key projects, and the board has already indicated its intention to become a major lithium producer.”
Dickson is currently the senior advisor to Quantum Energy Partners – the leading global provider of private capital to the responsibly sourced energy and energy transition and decarbonisation sectors and is an executive strategic advisor to The Chatterjee Group.
The Lake Resources Share price has risen ~16% year to date.
Hastie said the final lithium stock favoured by Stake investors is Sayona Mining, which has been added to the S&P Dow Jones ASX 200 following a rise of over 100% since the start of 2022, which could help with exposure to new investors.
“In February it hit a low of 11 cents, but now is up at 35 cents a share and it’s been a volatile ride for investors with timing a key aspect to the stock,” he said.
“But longer term investors have been kept happy by the continued rise.”