It has been a rough time to invest in the lithium industry. With spot prices in free fall, ASX lithium shares have been tumbling deep into the red.
Bell Potter appears to see this as a buying opportunity for patient investors, highlighting a number of shares which it believes have significant upside potential.
But which ASX lithium shares are buys? Let's take a look at three that the broker rates highly:
Liontown Resources Ltd (ASX: LTR)
The first ASX lithium share that Bell Potter remains positive on is Liontown Resources.
It continues to believe that the Kathleen Valley lithium project is highly strategic and appears to see the company as being seriously undervalued at current levels. It said:
LTR's 100% owned Kathleen Valley lithium project remains highly strategic in terms of scale, long project life and location in a tier-one mining jurisdiction. LTR has offtake contracts with top-tier EV and battery OEMs. Under our modelled assumptions, we expect that LTR is fully funded to free cash flow. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
Bell Potter has a speculative buy rating and 90 cents price target on the lithium miner's shares.
Patriot Battery Metals Inc (ASX: PMT)
A second ASX lithium share that could be a buy according to the broker is Patriot Battery Metals.
Bell Potter likes the company's Shaakichiuwaanaan Project and believes it is well-placed to supply lithium to the North American market in the coming years. It said:
The Shaakichiuwaanaan Project is highly strategic in terms of scale, jurisdiction and access to North American lithium-ion battery supply chains. PMT is funded to take the Project to full feasibility by the end of 2025. While permitting risks may be an impediment to PMT's near-term corporate appeal, we expect value re-rating as the Project is de-risked through permitting and as the Group's MRE continues to expand. PMT is an asset development company with prospective operations and cash flows.
The broker has a speculative buy rating and 40 cents price target on its shares.
Pilbara Minerals Ltd (ASX: PLS)
Finally, Bell Potter thinks that lithium giant Pilbara Minerals could be a top ASX lithium share to buy while it's down in the dumps.
Particularly given its low costs and world class Pilgangoora operation. It said:
PLS operates a low-cost asset in a tier one jurisdiction, is diversifying through the lithium value chain, and provides a clean exposure to global lithium fundamentals and sentiment. While we expect lithium prices to remain volatile, we hold a robust EV-demand driven long-term market outlook and believe higher prices are required to incentivise new sources of supply.
The broker has a buy rating and $2.00 price target on its shares.
