Why I’d buy and hold PLS shares for 10 years

When I think about long-term investments, I usually look for companies that can benefit from powerful structural trends over many years.

For me, lithium sits right in the middle of one of those trends. The global shift toward electric vehicles, battery storage, and electrification more broadly is still in its early stages. While lithium prices can be volatile in the short term, the long-term demand outlook for battery materials remains compelling.

That’s why I think PLS Group Ltd (ASX: PLS) could be a share worth buying and holding for the next decade.

A world-class lithium asset

One of the biggest reasons I like PLS is the quality of its core asset.

The company owns the Pilgangoora operation in Western Australia, which is one of the largest independent hard-rock lithium operations in the world. Large-scale, long-life assets like this are incredibly valuable in the resources sector because they can generate strong cash flow across multiple commodity cycles.

PLS has also demonstrated that it can run this asset efficiently. In its recent interim results, production increased to 432.8k tonnes, and sales reached 446k tonnes for the half year, reflecting continued operational strength.

What stands out to me is that the company continues to improve its operating performance even as lithium markets fluctuate. Unit operating costs declined while realised prices improved significantly, highlighting the strength of the business when conditions turn favourable.

A balance sheet built for cycles

Commodity companies often struggle when prices fall, but PLS appears well-positioned to handle those periods.

The company ended the first half with roughly $954 million in cash and total liquidity of about $1.6 billion.

That financial strength matters in a cyclical industry like lithium. It gives management flexibility to continue investing through the cycle rather than being forced to cut spending when prices are weak.

In my view, that kind of balance sheet resilience is exactly what long-term investors want to see in a mining company.

A clever expansion into South America

Another reason I think PLS shares look attractive over the long term is the company’s expansion strategy.

About a year ago, the company acquired Latin Resources at what many would consider the bottom of the lithium cycle. That deal cost approximately $560 million and gave PLS exposure to the Colina lithium project in Brazil.

Timing matters enormously in the resources sector. When lithium prices were depressed, assets across the industry were being valued far more conservatively.

If the same acquisition had been attempted today, after the strong rebound in lithium prices, I suspect it would have cost significantly more.

For PLS, that acquisition creates a potential second growth engine in South America while the Pilgangoora operation continues generating cash.

A business tied to the energy transition

Over the next decade, global demand for lithium is expected to rise significantly as electric vehicle adoption grows and battery storage becomes more widespread.

No one can predict exactly how lithium prices will move from year to year. However, companies that control large, low-cost deposits are often best positioned to benefit from long-term demand growth.

PLS already has scale, established partnerships across the lithium supply chain, and a strong operational track record.

Foolish Takeaway

Lithium is not a low-risk industry. Prices will rise and fall, and sentiment can swing quickly.

But when I look beyond the short-term noise, PLS stands out as a company with world-class assets, a strong balance sheet, and growing global exposure.

If I were looking to buy and hold a lithium share for the next 10 years, PLS would be high on my list.

The post Why I’d buy and hold PLS shares for 10 years appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino 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.