Pilbara Minerals Ltd (ASX: PLS) shares have done incredibly well for shareholders over the long term. Young ASX investors in particular are still reportedly loving the ASX lithium share. So in this article, we're going to look at what's attracting everyone, thanks to data from a clearing and broker services group.
For investors who don't know much about the business, Pilbara Minerals is a lithium miner that is trying to dig more lithium out of the ground and also become more involved in the value chain of producing battery-ready lithium.
Lithium is seen as an exciting field because of the predicted growth in electric vehicles as the world decarbonises.
How popular are Pilbara Minerals shares?
The Australian Financial Review reports that according to 300,000 trading accounts at Openmarkets, Pilbara Minerals was the most purchased company among millennial and Generation Z investors in the 12 months to 31 March 2023.
But lithium companies were not among the most popular buys for Baby Boomers or Generation X investors over a three-month or 12-month time period.
The AFR suggested investor interest perked up after a fall in lithium prices of around 70% after China's decision in January to curb electric vehicle subsidies.
Yet brokers such as Morgan Stanley suggest the lithium market is "turning around" with signs of improvement for the electric vehicle market, and amid tightening demand.
Why this particular ASX lithium share?
Portfolio manager at Acorn Capital, Rick Squires, pointed out that Pilbara Minerals is already producing lithium so it's not an ASX lithium share that's in the exploration or mine development stage. He said (courtesy of AFR):
When you start these mines up, they always have problems you never know about. It's always the unknown unknowns.
There's a lot of institutions that have been burnt before, in terms of that ramp-up and start-up phase…but if it goes well, there's a rapid re-rating, and you can make a lot of money.
I think retail investors are looking at Core Lithium and the production profile that's being forecast, and they're comparing that with Pilbara and Allkem and thinking, 'wow, there's really deep value', but they're not actually thinking about the risks.
Squires prefers large operators like Pilbara Minerals. As well, the ASX lithium share's operations are in the stable operating region of Western Australia.
He called Pilbara Minerals and Allkem Ltd (ASX: AKE) "reasonably stable" for resource companies, noting they have established processes, mines with long lives, and proven practices for extracting lithium economically. Squires commented:
Both companies are in the top 100 in the ASX, so they're large companies. Are they going to go up two or three times? No. But very few companies in the ASX go up two or three times in a year, so it depends on where you want to play.
Foolish takeaway
The ASX lithium share is generating a lot of cash flow. In the three months to 31 March 2023, its cash balance increased by $457 million to $2.68 billion. Not only is the business in an exciting industry, but it's printing bucketloads of cash at the moment.
Time will tell whether the younger Aussie investors are right in backing this growing lithium star.
