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The Pilbara (ASX:PLS) share price has gained 15% in a month. Here’s why this fund manager is still bullish

The global move to green energy is seeing lithium demand surge…
The post The Pilbara (ASX:PLS) share price has gained 15% in a month. Here’s why this fund manager is still bullish appeared first on The Motley Fool Australia. –

The Pilbara Minerals Ltd (ASX: PLS) share price is up 15% over the past month.

And this was a month that saw the S&P/ASX 200 Index (ASX: XJO) end flat.

Following on a strong run like this (and indeed a stellar year, as we’ll look at below), investors may be wondering if the ship has sailed for the Australian lithium-tantalum producer.

The answer to that, according to Kardinia Capital’s portfolio manager Kristiaan Rehder, is a resounding no.

Why this fund manager sees more upside ahead

Speaking with the Motley Fool, Rehder said the Pilbara share price is looking to benefit from 2 strong thematics. First, a likely coming rise in interest rates. Second, and more importantly, the company’s tier-1 lithium assets in a world that’s moving to green energy.

On the inflation front Rehder said:

If interest rates do lift in an inflationary environment, history shows that equity returns can beat inflation. Equity markets can move higher in a rising interest rate environment as long as earnings growth continues to grow alongside.

In this sort of environment, the commodity and energy sectors tend to stand out.

And when it comes to commodities, Rehder says lithium is hard to beat. And within that space, Kardinia Capital favours Pilbara:

In the resource sector, Pilbara Minerals is a core holding of ours.

Pilbara owns one of the largest hard rock lithium deposits in the world, and has a very long mine life of over 20 years. It has strong exposure to the emerging electrification of the global economy thematic. It is a straight forward mining operation, open pit, in a very stable mining jurisdiction of the Pilbara. It has a high-quality partner. And it has cost advantages over the brine operations in South America.

We expect continued margin expansion for that operation and it can even scale up. And with the recent move downstream to high-grade lithium carbonate we think this story is going to continue to improve.

Pilbara share price snapshot

As mentioned up top, the past month’s 15% gain for the Pilbara share price is par for the course for the ASX 200 lithium producer this past year, with shares gaining a whopping 334% in 12 months.

By comparison, the ASX 200 is up 13% in that same time.

Ih early trading today, Pilbara shares are down 1.65% to $2.39.

The post The Pilbara (ASX:PLS) share price has gained 15% in a month. Here’s why this fund manager is still bullish appeared first on The Motley Fool Australia.

Should you invest $1,000 in Pilbara right now?

Before you consider Pilbara, 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 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 August 16th 2021

More reading

Three quality ASX shares likely to outperform in 2022: fund manager

5 things to watch on the ASX 200 on Tuesday

These 3 ASX 200 shares are topping the volume charts this Monday

How does the Pilbara Minerals (ASX:PLS) share price compare to Mineral Resources?

ASX 200 lithium shares in focus amid China supply shortage

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.

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