Mining is a significant contributor to Australia’s economy with many different ores and minerals found in the country. Over the next 3 weeks, we will look at some of the key ones. This week we look at Lithium which is one of the so-called tech metals which are used in mobile phones, solar cells, driverless vehicles and batteries used to store power from renewable sources.
After a lull, Lithium stocks have appeared on the radar again. News websites around the world have been talking about China looking to ban petrol and diesel engines, with France, India, UK and Norway also looking at bans in the next 20 or so years. This in turn will drive demand for electric vehicles powered by batteries…and guess what is arguably the most popular and reliable rechargeable battery? You got it: Lithium-ion made from Lithium!
Using VectorVest, we can establish the top Lithium stocks in Australia with just a few clicks of the mouse. By going to the Viewers tab on the main toolbar, select Industry Viewer on the left and run our eyes down the top performing industries until finding Materials (Lithium). By double clicking on Materials (Lithium), we then bring up all the Lithium stocks in this industry. The default sort is by VST which ensures Lithium shares with the best combination of Value, Safety and Timing are brought to the top of the list.
As of the time of writing, Galaxy Resources (GXY.AX) is at the top of the list. If we graph Galaxy, we see that it has returned over 90% in the last 3 months! The second stock in the list is Orocobre Limited (ORE.AX) and it has gained over 30% in the last 3 months. The momentum of some of the Lithium stocks has been significant.
But be warned. Currently, Lithium stocks listed in Australia are not for the conservative investor! Pay special attention to earnings and valuations. Most Lithium stocks are overvalued with stock graphs showing erratic EPS – these stocks are being heavily driven by price performance (as measured by our technical indicator Relative Timing) and less so at this stage by financial performance (as measured by our fundamental indicators Relative Value and Relative Safety). Give it time – if the Lithium story pans out the way many analysts are predicting, then you will see the fundamentals improve as the companies move from speculation to reality.
Last year we flagged the potential to make money from Lithium shares on the VectorVest Australia Blog. Some of the gains of the Lithium stocks we analysed last year have been significant. For more details on how we used VectorVest to identify the best Lithium stocks last year Click Here.
You may wish to set up a WatchList to keep track of the Lithium stocks you are interested in.
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