With electric vehicle adoption rising and the clean energy transition underway, demand for lithium has been increasing strongly.
This has led to the white metal commanding sky high prices, which bodes well for the many lithium stocks listed on the Australian share market.
But which lithium shares could be in the buy zone? Two that have been named as buys are listed below. Here’s what analysts are saying about them:
Allkem Ltd (ASX: AKE)
The first lithium stock to look at is Allkem. It is a lithium giant which owns a collection of world class operations and projects across Western Australia, Argentina, and Canada.
Analysts at Morgans have named it their top pick in the lithium industry. They expect electric vehicle demand to remain strong with geopolitical events and a potentially tight oil market accelerating the shift towards electrification. Morgans has an add rating and $14.83 price target on its shares.
We maintain our ADD rating given the strong growth outlook for the company and the potential 24% upside to our valuation. AKE’s diverse products and geographical mix adds opportunities to capture value as the market evolves. There is further potential upside that are not in our numbers such as Olaroz stage 3 and/or another lithium hydroxide plant. Should the lithium market continue to remain strong AKE still has a large amount of untapped growth potential.
Mineral Resources Limited (ASX: MIN)
Another lithium stock to look at is Mineral Resources. It is the company behind the massive Wodgina operation, which is one of the largest known hard rock lithium deposits in the world with a production life of over 30 years. It also has the Mt Marion Lithium Project and exposure to iron ore.
Goldman Sachs is very bullish on Mineral Resources and currently has a buy rating and $73.80 price target on the company’s shares.
We forecast a more than doubling of group EBITDA to over A$2bn in FY23 driven by higher lithium and low grade iron ore prices, and a 5% increase to mining services volumes to ~300Mt. Over the next 5yrs we expect MIN’s mining services volumes to increase ~50% to over 400Mtpa, lithium volumes to triple, and iron ore equity volumes to nearly double.