We covered lithium and graphite as our top picks in the green battery metals universe as we wrote Lithium Stocks Will Be Wildly Bullish In 2023 and a Bullish Graphite Stocks Forecast 2023. What matters even more is the question HOW to play this super cycle. It is one thing to be able to see a mega cycle, it is another one to ‘play’ it in a profitable way.
We are going to summarize what we wrote before in the aforementioned forecasts.
The lithium market looks like it will heat up in 2023.
Pilbara Minerals, leader in the space, started and continued an epic secular breakout. It really is telling, the underlying message is the one we try to unlock in the next paragraph.
In our research note “Lithium & Graphite top stock selection” (available in the Momentum Investing restricted area) we have outlined the dynamics that the market is currently following. There are multiple criteria that play a role when selecting a lithium stock:
- Size of the lithium deposit.
- Richness of the lithium deposit.
- Expected year of production.
- Production volume.
- Cost of production.
- Offtake agreements.
We have taken all those inputs into consideration and found a consistent pattern as we mapped it against the stock charts of our top lithium stock selection.
We never share specific stock symbols in the public domain. That’s because a reader can pick up that symbol when it’s too late (top of a market), won’t have sufficient background to understand why we like it but also won’t have coverage as time progresses. There is a good reason why we avoid mentioning symbols in public posts.
The graphite market is lagging the lithium market. Moreover, graphite is a bi-furcated market currently.
What is important is that we expect graphite stocks to follow dynamics that will be different than the one in the lithium market. We believe the graphite market will trend as per the following principles:
- We believe there is a secular bull market in graphite stocks that will run throughout most of this decade.
- On a year by year basis we expect a typical cyclical evolution: powerful bull runs which are followed by good selling. 2022 was not a good year for most graphite stocks, this comes with a buy opportunity in the stocks that are working hard on getting producers in the next 2 to 3 years.
- We believe that 2023 should come with at least one or two bull runs in graphite stocks.
- Be extremely careful picking graphite stocks.
- Most graphite stocks are not worth your time nor capital.
- The graphite stocks with prospects of becoming a producer before 2025 (well capitalized) are the ones that will be the most juicy stocks to hold.
Our Momentum Investing team published a lithium stock selection, based on a very thorough analysis of the lithium market. We bring in structure based on the logic that the lithium market is following. Our update was shared with premium members on October 21st “Lithium & Graphite top stock selection” available in the restricted area of Momentum Investing members!