We are at an interesting stage in the valuation of Lithium stocks. The battery power evolution continues to mature and grow as a sector. Within that cycle, lithium pricing has boomed following the initial peak in late 2017.
When you watch the waves roll across the sea and break upon the shore, they usually move in sets. Within each set, the water level rises and the waves peak higher. Of course, this is a cycle so it cannot continue increasing. Eventually there is a retreat and the water level drops as the peaks flatten. After a period of calm, another set will roll through.
The first set of lithium waves rolled onto the investment scene in the middle of the last decade, with commodity prices peaking in 2017. Hard rock and Brine stocks peaked. Brine producers especially, created millionaires for those who invested early.
The second set of lithium waves formed late last year (lithium phase 2). One year later we are watching patrons of the Hard Rock Cafe go through a life changing experience. 10-20 baggers with eye watering valuations. The word is out, the charts have been plotted. The money flows in. Now we come to the interesting stage of this particular investment experience. What happens next? Typically, this is the part of the cycle that the 'smart money' gradually move some of the profits out. Not completely, especially on good quality stocks. But wise investors know that it is best to take some profit along the way.
If investors like this sector and believe it is part of the fourth industrial revolution as it is being called then, they will want to reinvest some of their profits in undervalued lithium stocks. There are not too many of those around, especially in the hard rock category. It is my opinion that we will begin to see more money flowing into those close to productions and actual producers. Waves which strike hard will rebound, and actually cause the next set to peak higher than normal.
The next year will see a dramatic change in AGY as a company; production-wise, resource-wise and price-wise. There were lots of casualties amongst the internet stocks of the early 2000's as the IOT sector matured. There will be in the lithium sector also. I like the steady progress AGY is making as it cements it's place among the producers.
Wave theory in investing is not limited to just TA and Euler wave enthusiasts!
AGY Price at posting:
18.0¢ Sentiment: Buy Disclosure: Held
