It's been a bumper year for S&P/ASX 200 Index (ASX: XJO) lithium stocks, and none have commanded the attention like Pilbara Minerals Ltd (ASX: PLS).
But Shaw and Partners senior resource analyst Peter O'Connor sees more opportunity in another ASX 200 lithium share – IGO Ltd (ASX: IGO).
The analyst believes it's a buy, saying the company could act as a hedge, representing future-facing commodities. Beyond lithium, IGO works in nickel, cobalt, and copper.
Let's take a closer look at what the fundie likes about the often overlooked $11 billion ASX 200 lithium share. The IGO share price is $15.37 right now.
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Is IGO a top ASX 200 lithium stock to buy?
Speaking with Market Matters' James Gerrish, O'Connor outlined why he's bullish on IGO:
[It has a] smart management team, good operators, great balance sheet, I like what they're doing. And they've got an enormous expansion opportunity in the lithium asset in [Western Australia].
It is the best quality, longest life, highest grade asset in the lithium space.
The fundie also said he gives the company "the award for this decade, of the best [merger and acquisition] trader."
Of course, referring to the company's acquisition of the Tianqi joint venture and the sale of its Tropicana Gold Mine. Not to mention its takeover of Western Areas.
The Tianqi acquisition was said to be completed when lithium was trading for around US$400 a tonne. As of Pilbara Mineral's latest auction, the material was trading for more than US$8,000 a tonne.
However, O'Connor warned that the stock will follow the commodity price, and right now 2023 looks likely to be a rough year for lithium:
It may be that the ramp-up of supply of lithium – which we know is too slow in the long term – but in the short term, it may just make it match to the demand slowing.
