The Pilbara Minerals share price has rocketed! Have I left it too late to buy?

A man sits nervously at his computer with his mouth resting against his hands clasped in front of him as he stares at the screen of his computer on a home desk.A man sits nervously at his computer with his mouth resting against his hands clasped in front of him as he stares at the screen of his computer on a home desk.

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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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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