Investing in lithium over recent years has been an extremely volatile ride which has seen heavyweights like Orocobre (ORE) more than double and then half over just a few years, we’ve witnessed both crowded positioning and panic selling as the growth around EV’s masked the impact on the underlying lithium prices which has a supply coefficient, as well as demand. To be specific we saw a battery boom in 2018 which met the almost inevitable bust in 2019, a common tale in financial markets which often throws up opportunities into the panic selling for the patient investor, one of the best illustration of “Fear & Greed” in modern times:
- Lithium-ion battery pack prices in 2010 were $1,100 kw/hr, by the start of this year they had fallen almost 90% i.e. extrapolating demand was only half of the equation.
However investors have started pushing the stocks significantly higher over the last 12-months with expanding EV sales a main driving factor, estimates are that Tesla et al will make up ~10% of car sales by just 2025. However it’s the additional uses of lithium in the likes of digital devices like smart phones which is getting more air time but as we’ve seen previously as prices of lithium rise production can be fairly easily increased, especially in Australia hence the optimum time to invest in the sector is a balancing game in our opinion.
The locally listed ACDC $247m ETF provides some global exposure to the sector but no Australian names reside in its top 10 holdings. Hence today I have briefly looked at 5 ASX stocks with lithium exposure, it’s been a volatile few years that’s for sure making optimum entry levels extremely important.
MM likes the ACDC ETF into a pullback towards $80
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