If you'd invested in S&P/ASX 300 Index (ASX: XKO) lithium stock Vulcan Energy Resources Ltd (ASX: VUL) a year ago, you'd have more than doubled your money by now.
On 19 February 2023, Vulcan Energy shares were trading for $2.06 apiece. In afternoon trade today, those same shares are changing hands for $4.30 each. That sees the ASX 300 lithium stock up an impressive 108.7% over 12 months.
For some context, the ASX 300 is up 9.9% over this same period.
However, as you can see on the chart below, not all stockholders will be sitting on gains.
The Vulcan Energy share price hit a multi-year closing high of $8.14 on 26 November. Investors who bought at those highs will currently be nursing losses of 47.2%.
But with shares now well down from the recent highs, Seneca Financial Solutions' Arthur Garipoli believes that Vulcan Energy is trading at a discount (courtesy of The Bull).
Here's why.
Image source: Getty Images
ASX 300 lithium stock in bargain territory
"This company engages in geothermal energy and lithium exploration and development in Europe," said Garipoli, who has a buy recommendation on the ASX 300 lithium stock.
Garipoli noted:
The company recently announced that it produced first lithium hydroxide monohydrate from its downstream optimisation plant in Germany. The product met key purity specifications, deeming it to be battery quality. We see this as a key milestone for the company and a major de-risking event.
Vulcan Energy made that announcement on 8 November. The company highlighted that the achievement represented the first sustainable lithium hydroxide fully domestically produced in Europe, including upstream raw material, in one integrated supply chain.
"First lithium hydroxide production is an important milestone for Vulcan," CEO Cris Moreno said on the day. "Importantly, this combination of process allows a very low cost, highly sustainable, premium product, helping to enable European battery and EV production competitiveness."
All cashed up
Another reason Garipoli is bullish on the outlook for the ASX 300 lithium stock is its strong balance sheet.
"The company is cashed up after completing a capital raising amid securing other funding commitments," he said.
Vulcan Energy successfully completed a fully underwritten placement on 11 December, raising $164 million via the issue of 28 million new shares. Shares were issued an offer price of $5.85 apiece.
And, as mentioned up top, with Vulcan Energy shares well down from their November highs, Garipoli sees the ASX 300 lithium stock as a potential bargain. If you can stomach some risk.
"The share price is trading at a discount, so we see value for the risk tolerant investor," Garipoli said.
