We consider some of the possible reasons why the lithium producer’s shares are so heavily traded
The post Why do Pilbara Minerals (ASX:PLS) shares keep topping the volume charts? appeared first on The Motley Fool Australia. –
Most days, the Motley Fool takes a look at the most traded ASX 200 shares that are bouncing around the markets each day. Recently, a very clear trend has emerged. That trend is Pilbara Minerals Ltd (ASX: PLS).
Pilbara Minerals, more often than not, has found its way into the top 3 most traded shares on the entire ASX 200. Not only that, the lithium producer is often the chart-topper, coming in at the No. 1 spot.
At first glance, this might seem rather strange. Pilbara Minerals is not an insignificant company on the ASX boards. But it still happens to be roughly the 83rd largest company on the ASX 200 by market capitalisation (that’s according to ETF provider iShares).
So you would think some of the ASX 200’s larger and more well-known shares might be more traded than Pilbara Minerals on average. What about Commonwealth Bank of Australia (ASX: CBA)? BHP Group Ltd (ASX: BHP)? CSL Limited (ASX: CSL)? Or Woolworths Group Ltd (ASX: WOW)?
But no, Pilbara Minerals tends to beat all of these companies more often than not when it comes to trading volume. Just yesterday, we discussed how Pilbara was topping the volume charts, pipping every other ASX 200 share, including all of those just listed.
So why is this the case?
Well, there are a few possible reasons we can look to.
Why do Pilbara Minerals shares consistently top the charts?
The first is pure mathematics. Pilbara Minerals has a relatively low numerical share price ($1.94 at the time of writing). Contrast that with many other ASX 200 blue chips, and the picture is quite different. Woolworths shares are presently going for $39.96 each. BHP is trading at $37.95. CBA is asking $103.72, while CSL is commanding a price of $291.77 per share.
Think about this. If an investor had $10,000 to spend on ASX shares, this would get them roughly 5,000 Pilbara Minerals shares on current pricing. However, the same amount of money would only buy 250 Woolies shares, 263 BHP shares, 96 CBA shares, and 34 CSL shares. So you can see why Pilbara might have a naturally higher than average share volume count.
Pilbara Minerals has also released quite a few business updates and developments over the past few weeks that might be contributing. Just this week, the company announced one of its mines has entered the commissioning phase.
Last month, the company also announced it was upgrading its mineral resource estimates for another project. And back in late August, we saw Pilbara deliver its FY21 earnings report which was very well received at the time.
Lithium is a space on the ASX in which investors have already shown an enormous level of interest, and this interest seems to have been steadily growing in 2021.
Combining the sentiment for lithium shares in general, together with the number of developments and news that keep coming out of Pilbara, and we have another potential reason why Pilbara Minerals shares are consistently topping the trading volume charts.
At the current Pilbara Minerals share price, this company has a market capitalisation of $5.76 billion.
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 August 16th 2021
Could the CBA (ASX:CBA) share price hit $120 by the end of 2021?
US warns Evergrande crisis could affect ‘entire world’
Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended CSL Ltd. 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.