Day: 1 February 2023

Woodside Energy Group Ltd (ASX: WDS) shares are in the headlines.

This comes as the S&P/ASX 200 Index (ASX: XJO) oil and gas company’s lengthy legal stoush with unions over collective bargaining rights looks to have come to an end.

What’s happening with the company’s workforce?

The Maritime Union of Australia and the Australian Workers Union, together known as the Offshore Alliance, have been battling Woodside’s management to secure collective bargaining rights for Woodside’s employees at its offshore gas platforms.

Over the past seven months, Woodside has filed nine legal petitions against the push for collective bargaining. Those appeals included arguing that the unions had fraudulently collected signatures from some members to support the bargaining rights.

But those appeals look to have been for naught. As The Australian Financial Review reports, the Fair Work Commission ruled that the Offshore Alliance had legitimately secured the majority support of production workers.

That means Woodside will need to undertake collective bargaining at its North Rankin, Goodwyn Alpha, and Angel offshore for the first time since 1994.

Over the past 30 years, the company has preferred to directly engage with workers on an individual contract basis.

However, deputy president of the Fair Work Commission Melanie Binet dismissed that penchant.

According to Binet (quoted by the AFR):

The fact that Woodside prefer to negotiate individually with its workforce does not weigh against the granting of the determination. In fact, this is the precise reason why the statutory power to make the determination exists, to compel employers who would prefer not to bargain.

“Woodside tried every trick their lawyers could think of to frustrate their employees’ desire to bargain for a collective agreement and in the end they only delayed the inevitable,” Daniel Walton, spokesman of the Offshore Alliance said.

Woodside is reviewing this week’s decision. A spokeswoman commented:

Woodside highly values our people. We have directly engaged with our workforce for decades, and continue to do so on an ongoing basis to ensure we have the right settings in place to support the best outcomes for our teams and for the company.

The company estimated its fly-in, fly-out (FIFO) workers already earn more than $200,000 per year.

How have Woodside shares been tracking longer-term?

Down just over 1% in intraday trading today, Woodside shares, as pictured below, have leapt 43% over the past 12 months.

The post Looking to buy Woodside shares? You might want to read this appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• Worried about where ASX 200 oil stocks are heading? Read this
• Sick of the grind? Here’s how I’d aim to replace my wage with dividend income in 2023
• Investing in ASX 200 energy shares? Here’s why the oil price may already have hit its 2023 lows
• Is now the time to load up on Woodside shares?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

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The Bapcor Ltd (ASX: BAP) share price may be a strong performer in 2023 because of the economic conditions. I think the S&P/ASX 200 Index (ASX: XJO) stock could be an underrated opportunity.

For readers who don’t know, Bapcor is an auto parts business with a number of different businesses including: Burson Auto Parts, Precision Automotive Equipment, BNT (NZ), Truckline (heavy commercial vehicles) and WANO (light commercial vehicles), Autobarn, Autopro, Midas, ABS, Shock Shop, and Battery Town.

It’s diversified across the automotive industry.

The Bapcor share price has dropped close to 10% over the past year. And there’s good reason to think that the company can outperform the ASX 200 in the coming months.

A downturn may not be bad news

Bapcor is a major seller of auto parts. It’s possible that a downturn will lead to a lower level of purchases of new cars.

But people still need to drive, and vehicles can still break down. Rather than buying a new car, more people may choose to go with fixing the vehicle with a new part. A downturn could mean stronger demand for many Bapcor businesses.

When the business gave an investor presentation in November 2022, it said that it had seen ongoing positive revenue growth despite lower market growth amid cost-of-living pressures in the retail sector and the New Zealand economy.

However, the company did say that it’s experiencing a temporary profit margin compression because its price adjustments lag the cost inflation that it’s seeing.

The current profit forecast on Commsec suggests the ASX 200 stock’s earnings per share (EPS) will be flat in FY23, at 38.7 cents. Then, it could grow EPS by 12% to 43.5 cents in FY24 and grow again by 19% to 51.7 cents in FY25.

Those projections would put the Bapcor share price at under 17 times FY23’s estimated earnings and at 12 times FY25’s estimated earnings.

Profit improvement potential

Bapcor has a program called ‘better than before’ where it aims to increase its net earnings before interest and tax (EBIT) by at least $100 million, enhance the return on invested capital (ROIC), and improve the company’s organisational health.

It’s going to achieve this in a variety of ways, including increasing internalisation of spending, supply chain optimisation, increasing the proportion of private label sales in certain categories, and consolidating supplier spending across the business for better pricing and rebates.

If the business is able to increase its presence in Asia, it could unlock a good source of new earnings in a large population region.

Profit growth could also enable the dividend to keep growing. It has increased its dividend every year since FY15. By FY25, it could be paying an annual dividend per share of 29.3 cents – this would translate into a grossed-up dividend yield of 6.5%.

Foolish takeaway

I think the ASX 200 stock is on track to grow its earnings in the coming years, which I think is promising for the Bapcor share price to rise in the future.

I’m not sure how the business will perform in the distant future when there are a substantial amount of electric vehicles on the road but in the next few years, it could still do well.

The post Why is nobody talking about this gem of an ASX 200 stock? appeared first on The Motley Fool Australia.

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More reading

• Still shopping, share price not dropping: Lovisa shines among 3 best ASX 200 retail shares of 2022
• 3 ASX 200 automotive shares worth buying despite headwinds: Citi

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 recommended Bapcor. 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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It’s been a relatively pleasant day of trading on the ASX boards so far this Wednesday. At the time of writing, the All Ordinaries Index (ASX: XAO) has gained 0.45%, putting the index at just over 7,720 points. But let’s talk about the galloping Arafura Rare Earths Ltd (ASX: ARU) share price.

Arafura shares are on fire today. The rare earths producer is currently rocketing a stunning 11.82% to 62 cents per share — a new 52-week high for Arafura.

But it’s also the highest the company’s shares have traded at in not three, not five, not ten, but eleven-and-a-half years. Yes, the last time Arafura shares traded in the 60-cent range was in late 2011:

So what’s behind the new 11-year high that Arafura investors are enjoying today?

Why is the Arafura share price at an 11-year high?

Well, most of the heavy lifting was done in 2022 – a year that saw Arafura shares rise by a whopping 121%.

As my Fool colleague Monica reported last month, this was due to a few factors, including rising demand for rare earths, positive developments at the company’s Nolans Project, long-term supply deals with major companies like Hyundai, and love from ASX brokers.

But let’s talk about what Arafura shares are doing today. It’s not often that an ASX share rockets by more than 10%.

Well, unfortunately, it’s not entirely clear what is driving Arafura shares so convincingly higher. There hasn’t been any major news from the company itself today.

But what we do know is that Arafura’s peers in the materials sector are also having a cracker of a day. Take the Lynas Rare Earths Ltd (ASX: LYC) share price. It’s currently up by a robust 4.37% at $9.80 a share. Fellow minerals explorer Australian Strategic Materials Ltd (ASX: ASM) is doing even better than Arafura, currently up an eye-catching 12.53%.

Lithium shares were also on fire today, with Pilbara Minerals Ltd (ASX: PLS) gaining around 3% this monring, while Sayona Mining Ltd (ASX: SYA) was up close to 4%.

So it looks as though investors are flooding into these sorts of shares en masse today. Given there is no other news out from Arafura, perhaps we can conclude that the company is just benefitting from a flood of optimism and goodwill for ASX materials shares this Wednesday.

At the current Arafura Rare Earths share price, this ASX materials share has a market capitalisation of $1.31 billion.

The post Why is the Arafura share price surging 12% to an 11-year high? appeared first on The Motley Fool Australia.

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More reading

• Why was the Lynas share price hit so hard on Tuesday?
• Here are the top 10 ASX 200 shares today
• Why Block, Core Lithium, Lynas, and Xero shares are charging higher today
• Lynas share price rises on 42% jump in sales revenue
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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.

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CSL Limited (ASX: CSL) shares have been positive performers over the last 12 months.

As you can see on the chart below, the biotherapeutics giant’s shares are up 15% since this time last year.

This has been driven by improving plasma collection conditions, which is expected to be a big boost to its earnings in the coming years.

Should you buy CSL shares before it reports its earnings?

While buying a share before it reports earnings carries risks, that hasn’t stopped Morgans from adding CSL’s shares to its best ideas list this morning.

According to the note, the broker has put it on its list with an add rating and $312.20 price target.

Morgans best ideas list is home to the ASX shares that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe supported by a higher-than-average level of confidence. They are also its most preferred sector exposures.

The note reveals that CSL was added to the list this month in the place of Healius Ltd (ASX: HLS). Morgans likes CSL due to its belief that 2023 could be the “break out” year for the company following a tough period during the pandemic. The broker explained:

A key portfolio holding and key sector pick, we believe CSL is poised to break-out this year, a COVID exit trade, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares offering good value trading around its long term forward multiple of 31.5x

Morgans isn’t alone with its positive view on CSL’s shares. This morning, Morgan Stanley has reiterated its overweight rating and notably higher price target of $354.00.

The post Should I buy CSL shares before this month’s earnings update? appeared first on The Motley Fool Australia.

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More reading

• ‘Incredibly cheap’: 2 ‘strong’ ASX shares expert would pounce on right now
• 3 ASX shares I dream of owning at the right price
• Jun Bei Liu’s 2 ‘structural growth’ ASX shares to buy now
• 3 of the best ASX 200 shares to buy in 2023: Bell Potter
• 3 ASX shares to buy in the hottest sector for 2023: Firetrail

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. 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.

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The share price of S&P/ASX 200 Index (ASX: XJO) consumer debt business Credit Corp Group Limited (ASX: CCP) plummeted this morning after the company revealed a major profit hit.

The Credit Corp share price fell 2.6% on open to $21.09 before plunging further to its intraday low of $19.64 – marking a 10.2% dive.

Interestingly, it has since bounced back to trade at $21.75 at the time of writing, 0.51% higher than its previous close.

ASX 200 financials share wobbles as profits fall 30%  

Here are the key takeaways from Credit Corp’s earnings for the first half:

• Post-tax profits tumbled 30% on the prior comparable period (pcp) to $31.8 million
• Revenue lifted 8% to $220.5 million
• Earnings per share (EPS) fell 31% to 46.9 cents
• Customer loan book grew 32% to $331 million
• Dividend slashed by 40% to 23 cents per share

While a lot of its first-half earnings look dire, the company’s consumer lending segment remains on track to post record full-year earnings.

Its profits tumbled due to up-front loss provisioning and marketing expense from rapid loan book growth; costs from increased United States resourcing; and run-off in the core Australia/New Zealand debt buying segment.  

What else happened last half?

The first half was a period of growth for the ASX 200 company.

Its loan book growth was born from its Wallet Wizard unsecured cash loan product. Strong demand brought a record $201 million of lending last half while the company maintained credit standards and rationed the volume of longer-duration auto loans.

What did management say?

CEO of Credit Corp Thomas Beregi commented on the news driving the ASX 200 company’s share price today, saying:

Wallet Wizard credit settings remain conservative and short durations coupled with relatively small loan sizes will contain risk should economic conditions deteriorate.

US charge-off volumes are growing and increased resourcing will enable Credit Corp to service recent and future purchases, growing collections and earnings over the medium term.

What’s next?

The remainder of financial year 2023 looks like it could be better for Credit Corp. The company expects an earnings recovery in the second half, mainly due to its consumer lending segment.

Its full-year profit is tipped to come in between $90 million and $97 million while EPS is forecast to end up between $1.33 and $1.43.

It’s also bolstered its purchased debt ledger acquisition guidance to between $290 million and $295 million and its net lending volumes guidance to between $140 million and $150 million.

Credit Corp share price outperforms ASX 200 in 2023

Today’s tumble included, the Credit Corp share price has posted a notable 14% gain so far this year. That’s compared to the ASX 200’s 8% rise.

Looking further back, however, the stock has fallen 40% over the last 12 months while the index has lifted 7%.

The post Guess which ASX 200 share dropped then popped on a 30% profit dive appeared first on The Motley Fool Australia.

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More reading

• Up 30% in 4 months! ASX 200 gold share Newcrest is still trading cheap: fundie
• ASX 200 lithium share Sayona Mining leaps on strong quarterly
• The Pilbara Minerals share price has rocketed! Have I left it too late to buy?
• I’d aim for $1 million buying just 5 to 10 ASX shares
• Could this ASX 200 share be an investment for explosive growth?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 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.

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S&P/ASX 300 Index (ASX: XKO) lithium share Argosy Minerals Ltd (ASX: AGY) is charging higher today.

Shares in the lithium stock are up 5.5% as we head into the lunch hour, currently trading for 67 cents apiece.

Here’s what’s spurring investor interest.

What did Argosy Minerals report?

The ASX 300 lithium share is leaping higher after reporting its Rincon Lithium Project – located in Salta Province, Argentina – is successfully nearing lithium carbonate production operations.

Argosy said 98% of the total works required to develop the 2,000 tonne per annum (tpa) lithium carbonate production operation are now complete.

Commissioning works are 91% complete, with Argosy having produced battery quality 99.76% lithium carbonate product (during single-run process works).

The full ramp-up phase is imminent, scheduled during the current quarter.

Steady-state production operations are forecast to commence by end of the second quarter of 2023. That will see Argosy emerge as only the second ASX listed commercial scale lithium carbonate producer.

Commenting on the progress sending the ASX 300 lithium share sharply higher today, Argosy managing director, Jerko Zuvela said, “The company is extremely excited as we prepare to commence lithium carbonate production operations at our Rincon Lithium Project 2,000tpa operation.”

Zuvela added:

We look forward to achieving many more significant milestones in 2023 as we transform into a cashflow generator, capitalising on lucrative lithium carbonate prices via upcoming product sales revenues, leading to a significant near-term growth phase for the company.

The company noted that lithium carbonate prices recently were quoted at US$76,000 per tonne on the Benchmark Mineral Intelligence lithium carbonate CIF Asia (spot) price.

How has the ASX 300 lithium share been tracking?

The Argosy Minerals share price is up 17% so far in 2023.

Over the past 12 months the ASX 300 lithium share, as shown below, has gained an impressive 91%.

The post ASX 300 lithium share Argosy Minerals soars 6% on imminent production appeared first on The Motley Fool Australia.

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More reading

• 3 ASX 300 shares on the move after quarterly updates
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• Buy these 2 ASX mining shares with over 30% upside: brokers

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

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The Newcrest Mining Ltd (ASX: NCM) share price has had a good run as of late. The S&P/ASX 200 Index (ASX: XJO) gold share has leapt 30.8% since the end of September to trade at $22.29 at the time of writing.

But its surge still hasn’t seen the stock trading for higher than its true value, according to contrarian investing gurus at Allan Gray. It still commands the top spot in the Allan Gray Australia Equity Fund, with fundies still labelling it “seemingly cheap”.

Let’s take a look at why Allan Gray is among the experts bullish on the ASX 200 gold share in 2023.  

ASX 200 gold share Newcrest still trading cheap: fundie

There are positives and negatives to Newcrest shares, according to Allan Gray analyst and portfolio manager Dr Suhas Nayak. But ultimately, the fundie is optimistic on the stock.

In fact, it makes up around 9% of the fund manager’s headline offering. It bolstered its position in Newcrest prior to the stock’s recent surge and is still holding tight to its position.

Commenting on its expectations for the ASX 200 gold share, Nayak said:

Newcrest is … a very long reserve life company, very, very low on the cost curve. Based on the earnings that we think it currently makes … Newcrest is, to us, seemingly cheap.

The company released its report for the three months ended 31 December last week, detailing a 3% drop in gold production. Much of which was due to drought conditions at its Lihir mine.

Such operational issues at the mine, along with the company’s capital expenditure, has led to “push back”, Nayak said. But Newcrest isn’t the only share capable of copping such criticism. The fundie continued:

I think the entire gold sector’s being quite ill-disciplined with respect to the capital allocation.

If they could just pull back on that and do something like the energy sector is done over the last two or three years, I think that the gold sector should before very strongly in the next two, there, four years.

Allan Gray isn’t alone in holding hope for the ASX 200 gold share.

Morgans has slapped Newcrest shares with an add rating and a $25.70 price target, my Fool colleague James reports. The broker is said to like the company’s “dependable production and earnings base”.

The post Up 30% in 4 months! ASX 200 gold share Newcrest is still trading cheap: fundie appeared first on The Motley Fool Australia.

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More reading

• ASX 200 lithium share Sayona Mining leaps on strong quarterly
• The Pilbara Minerals share price has rocketed! Have I left it too late to buy?
• I’d aim for $1 million buying just 5 to 10 ASX shares
• Could this ASX 200 share be an investment for explosive growth?
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 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.

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The team at Morgans has been busy running the rule over a number of S&P/ASX 200 Index (ASX: XJO) shares again this month.

Among its best ideas for February are the two ASX 200 shares listed below. Here’s what the broker is saying about them:

Aristocrat Leisure Limited (ASX: ALL)

This gaming technology is an ASX 200 share to buy this month according to Morgans. Its analysts are positive on Aristocrat due to its organic growth potential, solid cash conversion, and strong balance sheet. The latter provides the company with the ability to invest in growth opportunities. The broker explained:

We have three key reasons for being positive on ALL. They are: (1) long-term organic growth potential. ALL is better capitalised than many of its competitors and has what we regard as a strong platform to continue investment in design and development in both its land-based gaming and digital businesses; (2) strong cash conversion and ROCE. ALL is a capital-light business despite its ongoing investment in Gaming Operations capex and working capital. It has a high level of cash conversion and ROCE and (3) strong platform for investment. ALL has funding capacity for organic and inorganic investment in online RMG, even after the recent buyback. Its current available liquidity is $3.8bn.

Morgans has an add rating and $43.00 price target on Aristocrat’s shares.

Qantas Airways Limited (ASX: QAN)

Morgans has added this ASX 200 airline share to its best ideas list in February. In fact, the broker has elevated Qantas to the position of its top travel stock pick under coverage. This is thanks to its near-term earnings momentum and attractive valuation. It commented:

QAN is now our preferred pick out of our travel stocks under coverage given it has the most near-term earnings momentum. Looking across travel companies globally, airlines are now in the sweet spot given demand is massively exceeding supply. QAN is trading at a material discount compared to pre-COVID multiples, despite having structurally higher earnings, a much stronger balance sheet, a better domestic market position, a higher returning International business and more diversification (stronger Loyalty/Freight earnings).

Morgans has an add rating and $4.50 price target on Qantas’ shares.

The post Morgans names 2 of the best ASX 200 shares to buy in February appeared first on The Motley Fool Australia.

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More reading

• 3 of the very best ASX 200 travel shares to buy according to Goldman Sachs
• Up 8% in 2023, is it too late to buy Qantas shares now?
• 3 of the best ASX 200 shares to buy in 2023: Bell Potter
• Top ASX growth shares to buy in 2023
• 3 reasons to buy these top ASX growth shares: experts

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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S&P/ASX 200 Index (ASX: XJO) lithium share Sayona Mining Ltd (ASX: SYA) is up 2.88% in late morning trade.

Shares in the emerging lithium stock closed yesterday at 26 cents and are currently trading for 26.75 cents apiece.

This comes following the release of the company’s quarterly update for the three months ending 31 December.

What did Sayona Mining report?

The Sayona Mining share price is well in the green today after the ASX 200 lithium share said the restart of its flagship North American Lithium (NAL) project has accelerated towards first production.

Initial lithium production at NAL – based in Quebec, Canada – is expected late in the first quarter of 2023.

The miner said it had received all the critical equipment and required environmental approvals needed for the restart by the end of December. Progress towards the concentrator restart was reported to have reached nearly 90%.

In the new year, the ASX 200 lithium share revealed it successfully processed 400 tonnes of spodumene ore on 16 January as part of the concentrator commissioning. The company labelled this “a new milestone in the restart process at NAL”.

During the quarter, Sayona also launched a pre-feasibility study (PFS) on the potential to produce lithium carbonate at NAL.

Should that go through, Sayona will do so together with its partner Piedmont Lithium Inc (NASDAQ: PLL) The PFS results are expected in April. Sayona noted that NAL already has half of the facilities required to produce lithium carbonate, thanks to the partial construction of those facilities by the prior owners.

Atop providing updates on its range of other lithium projects, Sayona hasn’t thrown in the towel on gold.

Sayona said its 10 Pilbara gold leases are “prospective for intrusion‐related gold mineralisation, similar in style to that identified at the Hemi gold discovery”.

The miner said it will employ its experience with late‐stage intrusions, built up in the search for pegmatite  mineralisation, “to fast‐track identification of Hemi‐style targets”.

As for the balance sheet, total available funding at the end of the quarter was roughly $291 million. Sayona estimates this is sufficient to fund 3.5 quarters of operations.

How has this ASX 200 lithium share been tracking?

Sayona Mining has been on a tear in 2023. Since the closing bell on 30 December, the ASX 200 lithium share has gained a whopping 43%.

As you can see in the chart below, over the past 12 months the Sayona Mining share price has more than doubled, up 109%.

The post ASX 200 lithium share Sayona Mining leaps on strong quarterly appeared first on The Motley Fool Australia.

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More reading

• The Pilbara Minerals share price has rocketed! Have I left it too late to buy?
• I’d aim for $1 million buying just 5 to 10 ASX shares
• Could this ASX 200 share be an investment for explosive growth?
• These were the best performing ASX 200 shares in January
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

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The Pilbara Minerals Ltd (ASX: PLS) share price is up 2.63% in lunchtime trading to $4.875.

This places it among today’s top-performing S&P/ASX 200 Index (ASX: XJO) shares, at the time of writing.

Other ASX lithium shares are also trading well this morning. Allkem Ltd (ASX: AKE) is up 3.08% and Sayona Mining Ltd (ASX: SYA) is up 2.88%.

The Pilbara Minerals share price was also among the best performers of the ASX 200 in January, surging 27%.

So, have you left it too late to buy?

What’s the latest with the Pilbara Minerals share price?

January was a great month for ASX 200 shares. The stocks went up by a collective 6.2%.

In addition to obviously improved market sentiment, the Pilbara Minerals share price surged on some company news.

As my colleague James reported, a strong quarterly update gave Pilbara shares a big boost.

Production, sales volumes, lithium prices, and unit costs were all up quarter over quarter.

Plus, the company is sitting on a stack of cash, with a $2.226 billion cash balance at the end of December. That’s up A LOT (62%) on the $1.375 billion recorded at the end of September.

This is why the company is planning on paying its maiden dividend in FY23.

Pilbara Minerals announced last year that it intended to pay 20% to 30% of its free cash flow to shareholders.

How have Pilbara shares been performing?

Pilbara has been a favourite among ASX lithium shares investors over the past 12 months. This is one reason why the stock went to a record-high price of $5.66 in the final months of 2022.

While trading at those heights, some analysts said the stock was overvalued.

Morgans said Pilbara Minerals shares were trading at a price that didn’t provide sufficient risk/reward. The broker initiated coverage with a hold rating and a 12-month share price target of $4.70.

Some disagreed. Kardinia Capital’s Kristiaan Rehder noted that Pilbara Minerals was trading on a price-to-earnings (P/E) ratio of just eight times its forecasted FY23 earnings, despite the meteoric share price rise in 2022.

Macquarie gave Pilbara Minerals an outperform rating with a 12-month share price target of $7.70. 

As is often the case with commodity stocks, the vast variety of opinions between brokers on share prices is largely based on their commodity price forecasts.

Pilbara is pretty much a lithium pure play, which means its earnings are directly linked to lithium values.

(Fun fact: Pilbara is among the world’s top 10 global lithium producers alongside two other ASX 200 lithium stocks — Allkem and Mineral Resources Limited (ASX: MIN)).

So, brokers who think lithium prices are going to go down from here are likely to be wary of lithium stocks trading at all-time highs.

Have you left it too late to buy?

After reaching that record high in late 2022, the Pilbara Minerals share price did pull back. The stock opened at $3.75 on the first trading day of 2023.

At $4.875 now, Pilbara is still trading below its record high, but it’s not far off. The question is, should you care?

Lithium prices and the ASX 200 stocks associated with this mineral are inextricably linked to the long-term trends of decarbonisation and the rise of electric vehicles (EVs).

As reported in The Australian, Wealthi economist Peter Esho estimates there are six or seven million EVs zooming around the world today. That’s expected to rise to at least 150 million by 2030.

From an Australian point of view, our federal government has promised “policy leadership” on EVs.

You need to decide if you want a piece of these trends and, if so, whether Pilbara Minerals is your best play.

The post The Pilbara Minerals share price has rocketed! Have I left it too late to buy? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 lithium share Sayona Mining leaps on strong quarterly
• I’d aim for $1 million buying just 5 to 10 ASX shares
• Could this ASX 200 share be an investment for explosive growth?
• These were the best performing ASX 200 shares in January
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Bronwyn Allen has positions in Allkem and Macquarie Group. 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 positions in and has recommended Macquarie Group. 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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