The Allkem Ltd (ASX: AKE) share price has surged ahead in May.
The lithium company’s shares have gained 12% from their $12.18 market open on 2 May to Tuesday’s closing price of $13.71. In today’s trade, the company’s share price fell 2.77%. For perspective, the S&P/ASX 200 Index (ASX: XJO) closed 1.03% lower today.
So why has Allkem had such a good month?
Why has the Allkem share price gone up?
Allkem is a lithium and boron producer with projects in Argentina, Western Australia, Japan, and Canada.
The company’s share price appears to have surged on the back of positive broker notes and optimism that lithium demand will outstrip supply.
As my Foolish colleague Zach reported on 25 May, Barrenjoey analysts rated Allkem as a buy with a $15 price target. This is 9% more than its current share price.
Brokers at Cowen showed even more optimism toward the Allkem share price, upgrading it to an $18 price target.
Meanwhile, earlier in May, Morgans placed an add rating on the company’s share price with a $16.98 price target. As my Foolish colleague James noted, because Allkem is already shipping lithium in large quantities, it has the potential to benefit from high lithium prices.
In the company’s quarterly activities report released in mid-April, Allkem said it aims to increase lithium production three-fold by 2026. The company is targeting maintaining a 10% share of the global lithium market across the next decade.
The company’s Mt Caitlin operation, located in WA, produced 48,562 dry metric tonnes (dmt) of spodumene concentrate at 5.4% lithium oxide grade in the March quarter. A total of 66,011 tonnes were shipped in the quarter, generating record revenue of US$143.8 million from this project.
Allkem is also expanding the Olaroz lithium carbonate facility in Argentina with a stage two lithium facility. Construction was 77% complete by the end of March with production targeted in the second half of this year.
In Japan, the company has completed the construction of the Naraha lithium hydroxide plant. First production from this site is predicted in the third quarter of this year.
Share price snapshot
The Allkem share price has soared 108% in the past 12 months, while it is up nearly 32% year to date.
For perspective, the ASX 200 benchmark index has returned less than 1% in the past year.
Allkem has a market capitalisation of about $8.7 billion based on the current share price.
The post Why has May been such a great month for the Allkem share price? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Allkem right now?
Before you consider Allkem , you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Allkem wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- Why ASX lithium shares have ‘absolutely more room to run’ in 2022: expert
- 2 ASX All Ordinaries shares rocking new 52-week highs today
- 3 ASX lithium shares set to roar back: experts
- These were the best performing ASX 200 shares last week
- Analysts name 2 of the best ASX lithium stocks to buy now
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 Scott Phillips.
from The Motley Fool Australia https://ift.tt/kTFg5uP
Leave a Reply