Rocks in their heads? How young investors helped make Pilbara Minerals one of the most popular shares of FY22

group of friends meeting in the city center

group of friends meeting in the city center

Pilbara Minerals Ltd (ASX: PLS) shares were volatile during FY22. And it seems young investors could have been key to some of the company’s strong run.

Earlier in the 2022 calendar year, the Pilbara Minerals share price got close to $4. But by mid-June, it had almost halved to close to $2.

However, since that low, the Pilbara Minerals share price has soared around 25%.

According to Selfwealth Ltd (ASX: SWF) statistics, Pilbara Minerals was the seventh most-traded business on the Selfwealth platform during FY22 with a total trading volume of $322 million.

The Australian Financial Review reports Pilbara Minerals managed to rise 17 places to reach that seventh place. The climb saw the value of the company’s trading volumes increase by 212%.

Certainly, Pilbara Minerals wasn’t the only ASX lithium miner to see a massive increase in demand by Selfwealth users. In fact, lithium made up 14% of all trades. Pilbara’s lithium peers Lake Resources N.L. (ASX: LKE) and Core Lithium Ltd (ASX: CXO) also saw big increases in trade volumes.

The only ASX shares to see more trading volume than Pilbara Minerals shares were: Fortescue Metals Group Limited (ASX: FMG), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), and CSL Limited (ASX: CSL).

Selfwealth is one of several online brokers that aims to capture market share with cheaper brokerage fees. The broker has around 120,000 users, with ‘millennials’ and ‘gen Z’ making up 71% of its total investors.

The Selfwealth CEO Cath Whitaker was quoted by the AFR:

It doesn’t matter what age group or demographic, [retail investors] are still looking for that healthy return. Our mantra at SelfWealth is ‘here for decades, not days’, and in this time of uncertainty, retail investors are looking for more safe bets, if you like.

Is the Pilbara share price an opportunity?

Macquarie certainly thinks so, with a price target of $4.20. That implies a possible rise of more than 60% on the current share price. The optimism is due to the strong lithium prices that Pilbara Minerals is achieving.

However, the broker Credit Suisse is less optimistic. It has a ‘neutral’ rating, with a price target of just $2.40. It believes the prospect of a global recession and ongoing inflation difficulties could lead to a hit in the demand for electric vehicles, also depressing demand for lithium.

However, both Macquarie and Credit Suisse think that the business is going to generate more profit in FY23 than FY22.

Using Macquarie’s numbers, the Pilbara Minerals share price is valued at under five times FY23’s estimated earnings.

Credit Suisse’s estimated earnings for Pilbara Minerals puts the business at under five times FY23’s projected profit as well.

The post Rocks in their heads? How young investors helped make Pilbara Minerals one of the most popular shares of FY22 appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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