How the Vulcan (ASX:VUL) share price almost quadrupled in 2021

This lithium share was on fire in 2021…

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The Vulcan Energy Resources Ltd (ASX: VUL) share price was one of the best performers on the Australian share market in 2021.

Over the 12 months, the lithium developer’s shares rose a massive 277%.

This was despite the Vulcan share price ending the year at $10.36, which is almost 38% lower than its 52-week high of $16.65.

Why did the Vulcan share price almost quadruple in 2021?

Investors were buying Vulcan and other lithium shares last year amid the increasingly positive outlook for the battery making ingredient. This is due to the insatiable demand for the white metal from electric vehicle battery and renewable energy markets which is expected to significantly outstrip supply in the coming years.

And while Vulcan is not yet producing lithium, it has signed away a large portion of its future production to automakers. This gives investors good visibility on its future earnings.

Among the companies that have signed offtake agreements for lithium from the Zero Carbon Lithium Project in Germany are Renault, Volkswagen, and Stellantis. The latter may not be a familiar name, but its car brands will be. Stellantis is the world’s fourth largest automaker and the name behind brands including Alfa Romeo, Chrysler, Citroen, Fiat, Jeep, Maserati, and Peugeot.

Where next for its shares?

Incredibly, despite the Vulcan share price rocketing 277% higher in 2021, one leading broker believes it can more than double in 2022.

A recent note out of Canaccord Genuity reveals that its analysts have retained their speculative buy rating and $21.00 price target on the company’s shares.

This could make it well worth keeping a close eye on Vulcan’s shares again in 2022.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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