The global lithium price — hence ASX lithium shares — have been in freefall this year because of the economic uncertainty.
Many experts say this is an excellent time to buy, because in the long run the demand for the mineral will far outstrip what miners can dig out of the ground.
After all, high-powered batteries like those in electric cars, will be a critical tool in the world's transition to a lower carbon future.
But there are many lithium stocks to choose from on the ASX. Which ones are the best buys at the moment?
Fortunately, the analysts at Blackwattle Investment Partners gave their insight in a memo to clients this week.
The lithium shares best positioned for a lithium revival
The team has been backing IGO Ltd (ASX: IGO) and Mineral Resources Ltd (ASX: MIN), and they readily admit they have been underperforming due to weak lithium prices.
Shockingly, IGO shares have almost halved since its mid-July peak. The Mineral Resources stock price is down more than 37% since late January.
However, the Blackwattle team's faith is unwavering.
"We remain positive on the long-run outlook for lithium demand and favour miners that have long reserve lives and are first and second quartiles on the cost curve."
The simple fact is that Blackwattle analysts believe these two companies are the ones in the best position to deal with sector-wide conditions over the next few years.
"With C1 [net direct cash cost] and capital costs rising rapidly across the industry, we believe supply growth will be slower than consensus forecasts," the memo read.
"In our view, IGO and Mineral Resources are attractively valued compared to other listed producers."
Although other lithium stocks have also cooled off, the businesses may not be able to take advantage as well as IGO and MinRes when lithium prices climb once again.
"Many other listed producers face development risk execution and require significant production growth to justify market valuations based on our long-run spodumene price assumption of US$1,300 per tonne."
Indeed they both have plenty of fans outside of the Blackwattle team.
CMC Invest currently shows nine out of 16 analysts rating IGO Ltd as a buy, while a whopping 13 out of 18 say the same about Mineral Resources.
