Lithium Stocks to Watch and One Energy Stock in the ‘Too Hard Basket’

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ASX Lithium Stocks - Are Lithium Stocks Making a Comeback?

The other day I had a cheeky crack at anyone wanting to buy into AGL.

Why so?

It’s Australia’s biggest polluter!

Don’t write in!

I wasn’t having a go at the company for that — we do need electricity. I don’t advocate we all deindustrialise, turn vegan and worship Gaia.

But the stock just brings too many headaches for my book.

Profits are hard won in the market. I don’t want any more difficulties that don’t already come naturally. Exposure to coal goes into my ‘too hard basket’.

And what do we see this week with AGL?

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The Australian Financial Review reports…

‘Australia’s biggest carbon emitter, AGL Energy, is facing renewed pressure to hasten its exit from coal-fired power generation with a resolution to be put to the annual shareholder meeting demanding it bring its exit forward by at least 12 years.

Last time I checked back in June, AGL came out confidently and said they would be running their coal plants out to 2048.

That date struck me as absurd at the time. But, hey, who knows?

Now they have their shareholder base in the ear giving them a mouthful. This kind of pressure isn’t going to go away. Shareholders are going to hold companies to account here.

I do sympathise with management.

It’s very difficult to execute on a business plan when every day you could wake up with higher costs, more required capital spending or a protest out the front of your office.

It’ll likely be a much smoother ride as a shareholder if you avoid problems like these and focus on the companies that benefit from the transition away from fossil fuels and the traditional grid.

Here’s another example: Analysts at investment bank Citi are warning that Beach Energy Ltd [ASX:BPT] will likely need to drop the value of their energy assets…since the oil price took one between the legs.

Beach hasn’t done this yet, unlike some of the other companies.

I don’t think a writedown now would damage the share price too much. The stock is already down 48% since February. It’s been marked down already.

However, it’s indicative that you don’t currently get a great risk versus reward equation in traditional energy names. Why take the risk?

Writedowns, falling earnings…and an economy grinding along…not to mention the investor concern over climate litigation is now more urgent.

We can suspect that a lot of institutional fund managers will also put this type of stock in the too hard basket. Who is going to want to buy these types of names soon?

ASX Lithium Stocks to Watch

Where to look? Now is an excellent time to be going over lithium stocks and ranking them in some way.

Note that currently lithium prices are weak. But you want to make sure you know the strengths and weaknesses of each so when the price starts firing you’re not playing catch up. You could even begin to consider now if you’re prepared to hold for the very long term.

If you’re new to the market, here are some names to begin researching…

  • Pilbara Minerals Ltd [ASX:PLS]
  • Galaxy Resources Ltd [ASX:GXY]
  • Piedmont Lithium Ltd [ASX:PLL]
  • Liontown Resources Ltd [ASX:LTR]
  • Core Lithium Ltd [ASX:CXO]
  • Orocobre Ltd [ASX:ORE]

Best wishes,

Callum Newman Signature

Callum Newman,
Editor, Profit Watch

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