The SP is almost totally disconnected from reality, it has been since the late 2017.
Lithium, cobalt, graphite, the full range of battery related materials, have been subject to speculation and hype in much the same way as blockchain and marijuana related stocks have been in the bull market.
Too many people want to believe in quick and easy returns, instant $millions.
There is such a thing as too much good press. That doesn't mean that there isn't very real potential in Lithium or other battery material stocks though.
The big difference between these sectors is in the underlying value and potential of the of the industries, the true physical growth in demand for the product and the quality of the individual companies.
Like any other investment, it comes down to the reality of the fundamentals. The growth potential in battery materials is driven by the ever increasing global investment in the demand side - the multi billions of dollars committed by nearly all of the world's ICE vehicle manufacturers, the renewable energy transformation and development that drives storage technology.
This is not speculation, it is already fact. Multiple industries and increasingly the world's governments are committed to it, it's not going away.
But it's important to keep a level head and just stick to the reality that should guide good investment principles and expectations. Just because speculators jump on the band wagon don't get caught up in their hype and equally when the supposed "expert" financial analysts come to the party with over-egged doomsday prophecies (MS oversupply tsunami for example) having knowledge of why their statements are rubbish takes all the worry out of it.
Underlying all the nonsense, both positive and negative, is reality.
The lithium sector attracted speculators because of the enormous amount of publicity surrounding new energy. A gold rush mentality and boom/bust is the current state of play.
But like gold, the boom doesn't take away the underlying value of both the material or the well run, solid companies that are part of it. When the hype dies down the fundamentals will be reflected in the SP.
Galaxy is in a unique position in an industry with enormous potential for growth. We have world class assets, significant income, a very solid balance sheet and plans for converting it all into, if not one of the top three, at least one of the top five, battery materials companies in the world.
Allow the management the time and space to continue converting their plans into reality and eventually the SP will catch up, it won't reflect the company's true worth though until the real earnings start to roll in and support investor dividends, the supply chain matures and a clearer picture emerges of supply and demand in this materials space.
I have great confidence in this company (otherwise I wouldn't be investing, I am not a gambler) but I recognise that it is going to take time. I'm far more interested in the potential for growth and dividends in the future.
GXY Price at posting:
$2.23 Sentiment: Buy Disclosure: Held
