If you're on the lookout for last minute Christmas gift ideas for your investment portfolio, then Allkem Ltd (ASX: AKE) shares could be a top option.
Although, this lithium miner's shares are up 24% over the last 12 months, as shown below, one leading broker believes they can keep rising.
Should you buy Allkem shares for Christmas?
According to a note out of Goldman Sachs this month, its analysts have initiated coverage on the lithium miner with a buy rating and $15.20 price target.
Based on where Allkem shares are currently trading, this implies potential upside of 32% for investors over the next 12 months.
Interestingly, Goldman Sachs is bullish on Allkem despite being extremely bearish on lithium prices.
As mentioned here recently, the broker is predicting the lithium carbonate price to go from an average of US$59,331 a tonne this year to US$11,000 a tonne in 2024.
So why is Allkem a buy?
Goldman expects Allkem's production growth to help offset softer lithium prices and sees opportunities to add value through downstream activities.
Allkem has the best production outlook in our lithium coverage, growing equity LCE production >4x by FY27E, supporting earnings rebound to current record levels despite declining lithium prices, on the back of: (i) Olaroz Stage 2, (ii) Sal de Vida, (iii) James Bay, and (iv) the Naraha lithium hydroxide facility.
Allkem has the largest lithium metal contained resource base amongst our coverage though is trading at a discount to peers. Future opportunities in Olaroz/Cauchari Stage 3, enhanced brine recoveries at Olaroz, Potash production at SdV, Mt. Cattlin resource extension, and the possible downstream at James Bay provide upside risks to our forecasts.
