PLS Group Ltd (ASX: PLS), previously known as Pilbara Minerals, is a popular option for investors looking for exposure to the lithium industry.
But Bell Potter thinks that another ASX lithium stock could deliver better returns for investors in 2026.
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Which ASX lithium stock?
The stock that Bell Potter is tipping to rise strongly is Vulcan Energy Resources Ltd (ASX: VUL).
It is the name behind the Lionheart project in Germany's Upper Rhine Valley region. This project is aiming to commercialise lithium, electricity, and heat production from geothermal brines.
Bell Potter notes that phase one of the Lionheart project is expected to produce 24,000 tpa of lithium hydroxide monohydrate using adsorption-type direct lithium extraction and electrolysis.
The broker highlights that the ASX lithium stock has secured funding and made a final investment decision on the phase one of the Lionheart project. It was impressed with the strategic support it received. Bell Potter explains:
What distinguishes VUL is the strong level of strategic support for the company and Lionheart project. A HOCHTIEF, Siemens and private equity group Demeter €133m investment for 15% of Phase One values the project at €893m (A$1,595m). A KfW Raw Materials Fund investment of €150m provides another impressive valuation point. HOCHTIEF will also increase its VUL shareholding to 15.7% as part of the equity placement (previously 6.7%). VUL's senior debt is from a syndicate of 13 financial institutions including the European Investment Bank and top tier commercial banks.
Time to buy
Bell Potter thinks that if you have a high tolerance for risk, then you could do well with this one.
According to the note, the broker has reaffirmed its speculative buy rating with a trimmed price target of $5.05.
Based on its current share price of $3.97, this implies potential upside of 27% for investors over the next 12 months.
Commenting on the ASX lithium stock, the broker said:
Lionheart's location, near-term production and novel technology position VUL to benefit as lithium markets rebalance over the medium term. On our lithium price outlook (long term LHM US$20,000/t), average annual EBITDA is €290m (real). Our Lionheart NPV and the project's potential for subsequent staged expansions support our Valuation of $5.05/sh.
This valuation now incorporates the recent underwritten equity placement and project sell-down. VUL is an asset development company with only forecast cash flow; our Speculative risk rating recognises this high level of risk and potential share price volatility.
