Just when investors in ASX lithium shares thought the crash in the commodity price was over, it's dipped again in recent weeks.
"Lithium carbonate prices sank below CNY180,000 per tonne in September, the lowest since the two-and-a-half-year low of CNY165,000 in April, as a decline in demand for electric vehicles magnified pressure from elevated battery inventories for manufacturers," stated Trading Economics.
"Lower input demand resulted in a 10% reduction in battery prices in August, according to key market players."
This means that many ASX lithium shares have seen their valuations decline over the past couple of months.
If you still have long-term faith in the demand for the critical battery ingredient, which many experts do, what is the best bargain out there at the moment?
Morgans analyst Max Vickerson had an idea for the punters this week:
'Significant growth' on the horizon
The Allkem Ltd (ASX: AKE) share price has plunged more than 28% since 19 July, in line with the descent in global lithium prices.
Vickerson wrote on the Morgans blog that it's time for long-term investors to pounce.
"Recent share price weakness means we see significant upside and upgrade our rating to 'add'."
However, it's worth noting that the company recently adjusted some of its projections.
"Allkem announced a range of cost increases across its portfolio of growth projects, whilst the company has also increased its long-term commodity price assumptions, boosting its estimated project values."
The Morgans team had already priced in higher costs for many of Allkem's projects.
"Offsetting this we now include Cauchari in our valuation which lifts our price target… after factoring in higher costs in James Bay and Sal de Vida."
While Allkem presents as a bargain buy, Vickerson warned execution was imperative.
"We note the higher risk for Allkem with a valuation dependent upon successfully delivering significant growth."
Morgans analysts are far from the only ones bullish on the lithium producer.
According to CMC Markets, a whopping 13 out of 18 analysts currently rate Allkem shares as a buy. Eleven of those recommend it as a strong buy.
