PLS Group Ltd (ASX: PLS) shares are a popular option for investors looking for exposure to the lithium industry.
However, if you are looking for outsized returns, Bell Potter thinks the ASX lithium stock in this article could be the one to buy.
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Which ASX lithium stock?
The stock that Bell Potter is tipping to rocket is lithium miner Liontown Ltd (ASX: LTR).
The broker highlights that Liontown has announced plans to expand Kathleen Valley Spodumene Concentrate production capacity. It commented:
LTR has announced a positive Final Investment Decision to expand Kathleen Valley Spodumene Concentrate (5.4% Li2O) production capacity to around 780ktpa from FY30 (currently ~500ktpa). The expansion capital cost is estimated at $389m, including the $60-70m early works previously communicated in FY27 guidance. The expansion capital will be spent over FY27-29 with a step-change in production from FY30.
At normalised expanded production rates, targeted unit costs are $840-920/t (US$610-670/t) SC and annual sustaining capital $90-100m. LTR also reiterated FY27 production and unit cost guidance and Kathleen Valley remains on track to reach 2.8Mtpa mining and processing by mid-2027. FY27 capex guidance is now $435-495m (previously $320-370m), which incorporates the expansion capital.
While this expansion comes at a cost, Bell Potter appears pleased with the plans. It said:
LTR's expansion was within our capital cost estimate and is extremely efficient compared with the expansions of peer lithium producers. Wesfarmers (ASX: WES, not rated) recently announced Mt Holland expansion FID which adds 380ktpa SC capacity for gross capex of $1.3-1.4b. PLS Group's (ASX: PLS, Hold TP$5.20/sh) P2000 expansion will also likely be highly capital intensive. LTR expect to fund the expansion from cash ($561m at 30 June 2026) and cash flows from operations.
We have incorporated LTR's expansion metrics, resulting in EPS changes: FY27 -8%; FY28 -18%; and FY29 -17%. The key adjustment to our model being a step-change in production from FY30 compared with our previous assumption of more incremental expansions over FY28-29.
Big potential returns
According to the note, Bell Potter has retained its buy rating on the ASX lithium stock with a trimmed price target of $1.70 (from $1.90).
Based on its current share price of 93 cents, this implies potential upside of more than 80% for investors over the next 12 months.
Commenting on its buy recommendation, the broker said:
LTR's EV is lagging the recent recovery in lithium markets and expected tight supplydemand fundamentals. When LTR was trading at its current EV in October 2025, SC6 prices were US$820/t and net debt was $274m. Since then, the Kathleen Valley underground ramp-up has been further de-risked and spot SC6 prices are above US$1,700/t. While we expect lithium markets will be volatile, market fundamentals remain strong. Over FY27, LTR will continue to ramp up and de-risk Kathleen Valley, a highly strategic asset in terms of scale, long project life and location in a tier-one mining jurisdiction
