Australian miner Piedmont Lithium (NASDAQ:PLL), which owns a lithium project in North Carolina, has been a hot topic of conversation lately. And why wouldn’t it be? Piedmont Lithium stock has been on a tear and the short sellers must be feeling the pain right about now.
The main topic of conversation is Piedmont Lithium’s major deal inked with Tesla (NASDAQ:TSLA). This arrangement could provide Piedmont Lithium with a consistent revenue source for five years — and possibly even a full decade.
But I don’t want traders to get the impression that Piedmont Lithium is entirely dependent on one client or one deal. Instead, investors should view this company as a worthy contender in a growing market for lithium.
The number of pure-play lithium mining stocks is fairly limited. Piedmont Lithium stock is among the few choices, and its powerful move to the upside could still have room to run.
Piedmont Lithium Stock at a Glance
The aforementioned deal with Tesla proved to be a huge catalyst for Piedmont Lithium stock. When that agreement was announced to the public, the share price moved as much as 395% in a single trading session.
Prior to that move, Piedmont Lithium stock had been stuck under $10 for a long time. Now it’s highly unlikely that investors will be able to buy the shares below the $10 level.
The Piedmont Lithium stock price already touched $50 once in late September. Then, the bulls attempted to push it back to $50 again in early October. It is practically a foregone conclusion that they will make more attempts. And eventually, it will break through that resistance level.
Another positive catalyst would be helpful, but it’s probably not necessary. The lithium market is itself strong enough to provide Piedmont Lithium stock with a lasting long-term headwind.
Scaling Up for the Future
Saying that the world will run on lithium in the future might be an exaggeration. However, there’s a kernel of truth to this as lithium remains an underappreciated but essential resource.
The global market yields approximately 400,000 tons of lithium annually, according to one estimate. That’s enough lithium, evidently, to provide power to between 2 million and 3 million electric vehicles.
Those figures are certainly impressive, but the market is most likely still in its infancy. As Piedmont Lithium reports, the projected compound annual growth rate (CAGR) for lithium hydroxide demand from 2018 to 2028 is a whopping 36%.
Clearly, the demand for lithium will increase in scale as the electric vehicle market gains traction. And it’s not only electric cars, as electric delivery trucks, semis, buses and even ferries will use lithium.
Going Green with Spodumene
You might not have heard the word “spodumene” before. Yet, it could be an essential part of the green energy revolution.
Piedmont Lithium’s lithium asset features a unique spodumene-only mineralogy. What exactly does this mean? Well, spodumene concentrate is a lithium ore mineral. In other words, it is a material that companies can extract lithium from for use in important projects like electric vehicles. As Stormcrow Capital President Jon Hykawy once said, “The first question an investor should ask a hard-rock lithium CEO is ‘how much of the lithium reports to spodumene?’”
Regarding its chief advantage, research firm McKinsey explained that “Spodumene is [roughly] 15% more cost-effective to produce lithium hydroxide than salt brine.” Hence, when producing the in-demand lithium hydroxide, spodumene offers material cost savings.
And, X-ray diffraction analysis confirms that Piedmont Lithium’s ore body has a “pure spodumene nature” with a noted absence of petalite and lepidolite. To put it simply, Piedmont Lithium could be sitting on the mother lode of spodumene without an excess of impurities.
The scale and trajectory of the global lithium hydroxide market suggest continued growth. In light of this, the run-up in Piedmont Lithium stock should persist over the long run.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.
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