Pilbara Minerals is one of the cheapest shares in the ASX 200. Am I buying?

The stock has fallen almost 30% over the past half-year, so is it time to take advantage of the dip?

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Although lithium has been a hot S&P/ASX 200 Index (ASX: XJO) investment theme the last few years, just over the past six months, the commodity price has cooled off considerably.

That's perfectly demonstrated in the Pilbara Minerals Ltd (ASX: PLS) share price, which has sunk more than 28.6% over that period.

So is it time to buy the dip, or have lithium producers passed their bull run?

a man sits in unhappy contemplation staring at his computer on his desk in a home environment, propping his chin on his hand.

Image source: Getty Images

Professional investors aren't worried about dipping lithium prices

Lucky for The Motley Fool readers, a pair of experts this week had some opinions about the future of Pilabara shares.

They both rated it a buy.

Baker Young managed portfolio analyst Toby Grimm wasn't too worried about the short-term crash in lithium prices, as the demand for the battery ingredient would not wane in the long run.

He cited Liontown Resources Ltd (ASX: LTR)'s rejection of Albemarle Corporation (NYSE: ALB)'s takeover bid as evidence that the industry itself is confident about the future of lithium.

"We believe Pilbara is worth adding to portfolios."

eToro market analyst Josh Gilbert noted that Pilbara is increasing its output, which would cancel out the short-term dip in the commodity price

"Pilbara plans to increase production by 17% this year, with a target of doubling production by 2026."

He urged investors to buy in with a long-term view.

"Electric vehicle adoption has really only just begun and has a long runway, with lithium demand only set to increase in the years ahead," said Gilbert.

"According to Bloomberg, lithium-ion battery demand is expected to more than double in 2023 from 2020 levels, whilst EV sales look set to increase by more than 30% in 2023."

Plenty of Gilbert and Grimm's peers agree with their bullishness on Pilbara.

According to CMC Markets, 10 out of 17 analysts currently rate the stock as a buy. Nine of those even recommend Pilbara as a strong buy.

Motley Fool contributor Tony Yoo 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 Scott Phillips.

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