Top Performing ASX Lithium Stocks Of 2021
Australian shares gained ground on Wednesday. This follows a volatile session that saw the market fall at the open. However, as the day progress, the ASX 200 rallied on news of Evergrande’s deal with bondholders.
The Australian benchmark ended the day higher, as gains in the resources, energy and mining sectors led shares higher. At the close in Sydney, the ASX 200 rose by 0.32%.
Our List of Lithium Stocks Of The Week That Needs Close Monitoring.
At the moment of writing, the Australian index still remains 4.6% below its all-time high. The recent pullback on the broad market could be an opportunity to consider these two plays that are set to rebound.
Mineral Resources Limited (ASX: MIN)
One of the hot stocks in a very hot sector is Mineral Resources. MIN is one of the lithium stocks that we strongly believe in. Indeed, we think it is the right time to consider this earnings winner. Why?
Today, MIN ended the day in green, up 2.24% to $46.64 per share. This is quite a good performance, and even better when we look at the year-to-date return of 24.5%. That is twice the return of the broad market.
However, recently, Mineral has been affected by the falling iron ore price. But we remain quite positive with MIN. We think that Mineral Resources will not be much affected by the iron ore price volatility. Hence, the company’s exposure to lithium may be able to limit the damage done by the weaker commodities price. In our view, the strengthening of the company’s lithium business arm could support a price target of $65 for the next twelve-month period.
According to Citi, despite the expected profit decline, the Mineral share price is valued at 12x for FY23’s earnings. Furthermore, the broker is also projecting a dividend yield growth to circa 6% in that year.
During FY21, Mineral strong underlying net profit grew by 230% to $1.1 billion. Earnings were boosted by elevated commodities prices.
Since Mineral rallied to an all-time high in July this year, and with the recent pullback by 28% to $46.64 at the closing today. This could be an opportunity to seize to get in this future earnings winner while it is still relatively cheap.
Orocobre Limited (ASX: ORE)
Orocobre is one interesting stock in the resource sector. It is an Australian mineral resources company based in Brisbane. ORE is a global supplier of lithium carbonate and boron. They have resources predominantly located in Argentina.
Orocobre has a solid partnership with the trading arm of Toyota. ORE has built the first commercial, brine-based lithium operation in ~20 years. The firm mainly produces and sells lithium to various industries. What we also like about this company is that it is one of the biggest and lowest-cost lithium producers in the world.
Besides, Orocobre is quite active. Hence, ORE is in the process of constructing a large-scale lithium hydroxide plant in Japan. This is the first of its kind for the country. The infrastructure will provide lithium-based products for the development of batteries.
Since the start of the year, the lithium miner’s shares have risen by an impressive 98%. ORE shares are currently valued at $8.88. It might seem overstretched given the year-to-date performance. But it is not the opinion of most of the analysts on the market. Actually, Citi has retained its buy rating and lifted its price target on ORE to $10.50 per share. In fact, based on the current share price of $8.88, this implies a potential upside of 18% over the next 12 months.
