Is this the best-value ASX lithium share right now?

ASX lithium shares may be hot at the moment, but which is the best value on the market?

Two ASX lithium shares that reported earnings recently are Pilbara Minerals Ltd (ASX: PLS) and Mineral Resources Limited (ASX: MIN). The Pilbara share price finished 4.58% in the green today, while Mineral Resources climbed 2.54%

So which of these top lithium shares does one expert recommend?

Which lithium stock is best?

ASX lithium shares are popular right now due to surging demand and tight supply, with lithium a critical component in electric vehicle (EV) batteries.

Speaking with livewire yesterday, Eley Griffiths Group analyst and portfolio manager Tim Serjeant gave some clues to the best ASX lithium shares to buy.

Which is the cheapest lithium stock in the market? Look, it’s how adventurous you want to be.

I think today, [Pilbara] has the best exposure to current pricing dynamics… it is incredibly challenging to bring these assets into production. And I think that reinforces the positions of the incumbents. 

Pilbara Minerals reported its half-year financial results to the market this week, while Mineral Resources presented its financial results on 9 February. Pilbara reported an underlying profit after tax of $84.2 million and the shock exit of its CEO. Meanwhile, as my Foolish colleague James reported, the half-year results presented by Mineral Resources fell short of expectations.

One to buy, one to hold, says expert

Serjeant recommends shareholders buy Pilbara, and hold Mineral Resources, saying:

I think in the shorter term, [Pilbara] is a clean 100% exposure to that raw material shortage in lithium, through spodumene. For me, given the pricing backdrop, I think in the shorter term that’s probably where you want to be.

[Mineral Resources] is a hold today but their position in the value chain — being further downstream — means there is a lot of embedded growth to come over the next three to five years. 

Serjeant said he did not believe there was enough incentive to take risks with emerging ASX lithium shares compared to six to nine months ago.

However, he noted that Core Lithium Ltd (ASX: CXO) and Liontown Resources Limited (ASX: LTR) may be worth considering if the bigger players underperformed.

That said, I think the lithium industry is going to prove that you want to back one of the incumbents as opposed to backing smaller players outside of that. That’s how I expect it will play out.

How have these ASX lithium shares been performing?

The Pilbara share price has soared 151% in the past year, while Mineral Resources has surged nearly 13%.

In comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) has climbed 2.4% in the past year.

Year to date, Pilbara has plunged 14%, while Mineral Resources has tumbled about 20%.

The post Is this the best-value ASX lithium share right now? appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts this Friday
• Here are the 3 most heavily traded ASX 200 shares on Thursday
• How have ASX lithium stocks been faring this reporting season?
• These 3 ASX 200 shares are topping the volume charts this Wednesday
• Pilbara Mineral (ASX:PLS) share price sinks 7% amid half-year results and CEO exit

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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