Pilbara Minerals Ltd (ASX: PLS) shares have been very strong performers in 2021. Much to the delight of its shareholders,…
The post If you’d bought $1,000 of Pilbara Minerals shares 5 years ago, here’s what it would be worth appeared first on The Motley Fool Australia. –
Pilbara Minerals Ltd (ASX: PLS) shares have been very strong performers in 2021.
Much to the delight of its shareholders, the lithium miner’s shares are up a whopping 171%.
But that’s only telling part of the story. Investors that picked up shares five years ago have done even better.
What would have happened if you’d bought $1,000 of Pilbara Minerals shares 5 years ago?
Any investors that bought Pilbara Minerals shares five years ago would have smashed the market return.
During this time, the company’s shares have averaged a total return of 39% per annum.
This would have turned a $1,000 investment into ~$5,200 today. That’s more than four times your original investment.
Why are its shares smashing the market?
Investors have been bidding Pilbara Minerals shares higher in recent years on the belief that it stands to benefit greatly from rising lithium prices.
For example, during the fourth quarter of FY 2021, the company didn’t reveal the price it was commanding, but mentioned that spodumene concentrate prices were being reported in the range of US$700 and US$975/dmt.
This compares very favourably to the unit cash operating cost of US$441/dmt (CIF China) that was achieved for the quarter.
Another positive was the outperformance of its shipments. Pilbara Minerals revealed that it shipped 95,972 dmt of spodumene concentrate for the quarter. This was ahead of its guidance range of 75,000 to 90,000 dmt.
The good news for the company, and Pilbara Minerals shares, is that JP Morgan is forecasting strong long term prices as demand increases. This is being driven by the electrification revolution, with households turning to electric vehicles (EV) and battery power storage.
This week it upgraded its long term-lithium spodumene price forecast by 31% to US$850 a tonne. If this proves accurate, it leaves Pilbara Minerals well-placed to grow its profits as production ramps up across its operations.
Whether this leads to another five years of outperformance, time will tell. But the future certainly does look bright.
Should you invest $1,000 in Pilbara Minerals right now?
Before you consider Pilbara Minerals, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Pilbara Minerals wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of May 24th 2021
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 Bruce Jackson.