While many investors are currently praying for “a Fed pivot” to rescue their battered stocks, is there already a market niche that offers some portfolio relief? The Market Herald recently took another look at the red-hot lithium market.
Lithium market still heating up as end-users scramble for new supply
In that article, we pointed investors toward a junior lithium exploration company: Rover Metals Corp (TSXV: ROVR/OTC:ROVMF). Rover Metals’ Let’s Go Lithium Project in Nevada offers investors an inexpensive entry point as the Company seeks to develop a lithium claystone property.
As we previously noted, Nevada is the host of the only operating lithium mine in the United States today. That honour belongs to lithium giant Albemarle Corporation (NYSE:ALB).
Being the U.S.’s only operating lithium producer isn’t Albemarle’s only distinction at the present time. Notice anything “unusual” in the chart below versus nearly every other stock chart today?
It’s sloping upward. While most other equities have (more or less) fallen off a cliff in the recent market meltdown, ALB looks solid as a rock.
Even the 1-year chart has a distinctively different appearance.
Albemarle has been able to tread water over the past year, while most other equities are currently mired near/at 52-week lows. In very tough market conditions, that’s called “sanctuary.”
Investors with their finger on the pulse of the lithium market won’t be surprised by the stock performance of ALB.
Lithium Price Smashes New Record as Supply Struggles to Feed EV Growth
That headline basically sums up market conditions: heavy (and growing) demand for lithium and not enough supply to go around. The result: record prices.
Why should mining investors be actively scouting out junior lithium stocks at present? This October 27th article from Resource World connects the dots.
Record high lithium prices to fuel demand for property acquisitions
Whenever a supply crunch hits any metal/mineral market, both investors and producers start looking further down the food chain for new supply opportunities.
Enter Rover Metals Corp.
Despite the strength of the lithium sector, Rover Metals (like other lithium juniors) has been caught in the market down-draft and is trading close to its 52-week low.
It’s a huge market disconnect. With many lithium juniors trading at bargain-basement prices, why look at Rover Metals?
Nevada is not only an established jurisdiction for lithium production and exploration, it’s currently seeing a “lithium rush” in response to the powerful bull market for lithium.
However, Rover Metals offers investors more than just being located in the right jurisdiction. It has the right type of property to capitalize on the lithium opportunity in Nevada.
It’s all about water. Nevada doesn’t have a lot, and recent drought conditions certainly haven’t improved this situation.
Lithium brine operations are famous for requiring large quantities of fresh water to extract the lithium from these brines. Lithium claystone operations require significantly less water.
Whether you are a lithium investor looking for a stock prospect or a lithium miner looking for an exploration prospect, Rover Metals’ Let’s Go Lithium Project is going to catch your eye.
Previous sampling on the Project has uncovered lithium values of up to 1,218 ppm Li. The Company has telegraphed plans for some near-term drilling on the property.
It’s not easy for investors to pull the trigger on making additions to their portfolio in current market conditions. But as bad as conditions are at present, they could get worse before they get better.
Looking for shelter in the short-term and excellent growth prospects over the longer term? Lithium stocks beckon. And lithium juniors (clearly) offer the strongest value propositions.
Best case, these grossly mispriced lithium juniors break out ahead of any general rebound in markets.
Worst case, these junior lithium stocks rise with other equities. Still, they substantially outperform due to (a) gross under-pricing of these stocks at present and (b) the spectacular growth profile for the lithium sector.
Lithium is a red-hot market. Nevada is a rising lithium jurisdiction. Rover Metals is well-positioned in Nevada. Junior lithium stocks are grossly under-priced (with lithium properties in high demand).
For investors looking hard for favourable risk/reward scenarios – and some sanctuary — Rover Metals warrants some serious consideration.
FULL DISCLOSURE: This is a paid article by The Market Herald.
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