Pilbara Minerals Ltd (ASX: PLS) shares have taken a tumble over the past 12 months.
Despite a strong rebound in recent months, they remain down 23% since this time last year.
Investors have been selling the lithium miner and peers after the lithium price downturn weighed heavily on sentiment.
Weakness in the battery-making ingredient has dragged profits lower across the sector, with concerns about oversupply dominating the short-term outlook.
But should they be taking advantage of this weakness to buy and hold this ASX stock?
Lithium weakness
It is true that lithium markets are currently oversupplied, and that could linger for a while yet.
However, many analysts believe this is a temporary imbalance. As adoption of electric vehicles accelerates across the globe, demand for lithium-ion batteries is expected to surge.
At some point, demand is expected to outpace supply. And when that happens, prices are tipped to move meaningfully higher again, creating a far more supportive environment for producers like Pilbara Minerals. Bell Potter recently commented:
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 supply.
Why Pilbara Minerals stands out
Not all lithium miners are created equal. Pilbara Minerals has emerged as one of the strongest operators in the space, with world-class projects such as Pilgangoora project in Western Australia.
Importantly, the company sits at the low end of the cost curve. This means that even when prices are soft, Pilbara Minerals can keep production profitable. And when lithium prices recover, its margins have the potential to expand significantly, giving shareholders strong leverage to the upside.
A long-term opportunity for this ASX stock?
For patient investors, this selloff could represent a golden buying opportunity. The market is focused on near-term challenges, but the long-term case for lithium remains compelling.
Global automakers are investing billions into electrification, governments are tightening emissions standards, and energy storage solutions are becoming more important. Lithium is central to all of these trends, and this ASX stock is in prime position to benefit.
One broker that remains positive and believes that Pilbara Minerals shares can push higher from here is Canaccord Genuity. Its analysts currently have a buy rating and $2.70 price target on them.
All in all, this could make this ASX stock worth considering, especially if you are wanting exposure to the mining sector.
