Which ASX lithium shares are performing best in 2022?

The value of lithium carbonate hit a record high this month at US$71,370.50 per tonne. No wonder ASX lithium shares are garnering lots of attention.

Three miners stand together at a mine site studying documents with equipment in the background

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • ASX lithium shares have become favourites among investors 
  • The value of lithium carbonate hit a record high this month at US$71,370.50 per tonne
  • We analyse the share price performance of a variety of ASX lithium shares 

ASX lithium shares have become market darlings over the past couple of years. They've arguably replaced technology shares, which were the 'in thing' before the COVID-19 pandemic turned everything upside down.

The price of lithium has risen astronomically as the world continues to grow a whole new industry in electric vehicle (EV) manufacturing.

In fact, the value of lithium carbonate hit a record high this month at US$71,370.50 per tonne.

According to Trading Economics, that's an 80% increase year to date "as surging demand coincides with lower supply".

No wonder ASX lithium shares are garnering a lot of attention.

Which ASX lithium shares are performing best right now?

Let's do a snapshot of how some of the largest ASX lithium shares (by market capitalisation) are performing year to date in 2022.

  • The Pilbara Minerals Ltd (ASX: PLS) share price is 40.3% higher (market cap $14.59 billion)
  • The Allkem Ltd (ASX: AKE) share price is 39.9% higher ($10.17 billion)
  • The Core Lithium Ltd (ASX: CXO) share price is 123% higher ($2.5 billion)
  • The Sayona Mining Ltd (ASX: SYA) share price is 78.6% higher ($2.2 billion)
  • The Lake Resources N.L. (ASX: LKE) share price is down 2.75% ($1.45 billion).

Here's a snapshot of how some of the junior ASX lithium shares are doing this year. Always remember, buying nano, micro and small-cap shares can be risky business, so tread carefully and do your research.

  • The Global Lithium Resources Ltd (ASX: GL1) share price is 121% higher (market cap $535 million)
  • The Anson Resources Ltd (ASX: ASN) share price is 160.7% higher ($396.74 million)
  • The Arizona Lithium Ltd (ASX: AZL) share price is down 29.2% ($209.66 million)
  • The Iris Metals Ltd (ASX: IR1) share price is 186.2% higher ($198.94 million)
  • The Ragusa Minerals Ltd (ASX: RAS) share price is 300% higher ($35.34M).

Business performance vs. share price performance

As seasoned investors know, the performance of a business doesn't necessarily correspond with the performance of its share price and vice versa. Annoying, right?

This is especially the case with young, growing companies that the market is excited about. Investors can sometimes bid the share price up on expectations of future profits, not current profits.

Share price growth doesn't necessarily indicate great revenue and profit, or superior management. So when assessing ASX lithium shares for investment, you can't just look at what the share prices have done lately. You need to get under the hood and check the inner workings of each company are sound.

With reporting season just behind us, let's compare a few metrics on the two largest ASX lithium shares.

Pilbara Minerals FY22 results

  • Revenue up 577% year-over-year (yoy) to $1.2 billion
  • EBITDA of $814.5 million, up from $21.4 million in FY21
  • Statutory net profit after tax (NPAT) of $561.8 million, up from a loss of $51.4 million loss in FY21
  • Share price went up 53.4% over FY22
  • Price-to-earnings (P/E) ratio of 17.86 compared to 9.51 for the sector today.

Allkem FY22 results

  • Revenue up 800% yoy to US$770 million
  • EBITDAIX of US$513.1 million
  • Consolidated NPAT of US$337 million, up from a loss of US$89.5 million in FY21
  • Share price went up 54.8% over FY22
  • P/E ratio today of 17.53 compared to 9.51 for the sector today.

Why is the value of lithium rising?

The reasons behind this month's record lithium price are clear.

According to Trading Economics analysis:

Added stimulus and cash incentives by local Chinese governments spurred growth in demand of electric vehicles in the world's second largest economy, notching a 100% year-on-year increase in August.

In the US, demand for electric vehicles is set to increase as the newly passed "Inflation Reduction Act" extends tax breaks for new electric vehicle purchases.

On the supply side, the energy crisis in China brought by record-setting heat waves led multiple lithium producers in Sichuan to suspend operations, adding to the upside of soaring lithium costs in the near-term.

Scarcity led auto manufacturers with large bets on battery electric vehicles to compete for long-term supply contracts, including Ford and Stellantis. Also, electric vehicle giant Tesla mulled building its own lithium refinery in Texas.

Motley Fool contributor Bronwyn Allen has positions in Allkem Limited. 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 Scott Phillips.

More on Resources Shares

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Dividend Investing

Want to bank the Rio Tinto dividend? You'll need to be fast!

Rio Tinto is about to pay a hefty dividend.

Read more »

Miner holding cash which represents dividends.
Dividend Investing

A 22% yield on Fortescue shares? Here's how these passive income investors achieved it!

Fortescue shares are popular among passive income investors for their juicy fully-franked dividends.

Read more »

Miner looking at a tablet.
Resources Shares

How global job cuts could boost the BHP share price

The mining giant is planning cost-cutting to help its profits.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

This ASX All Ords stock just surged 88% in less than 3 days! Any guesses?

The ASX All Ords stock is drawing intense buying interest from investors this week.

Read more »

Scared looking people on a rollercoaster ride representing the volatile Mineral Resources share price in 2022
Resources Shares

How is the Fortescue share price down 3% today?

Shareholders should be cheering today's Fortescue losses.

Read more »

2 people at mining site, bhp share price, mining shares
Resources Shares

Why is the BHP share price trailing the ASX 200 on Tuesday?

BHP shares are underperforming the ASX 200 today.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Resources Shares

These ASX 200 mining stocks can deliver 20%+ returns

Analysts are tipping big returns from these miners.

Read more »

Miner looking at a tablet.
Mergers & Acquisitions

Alumina shares leap 8% on Alcoa takeover bid

ASX 200 investors are sending the Alumina share price soaring following confirmation of Alcoa’s takeover intentions.

Read more »