Three ASX battery plays to hit a potential Tesla jackpot

Monday, 6 June 2022 — Albert Park

[7 min read]

Dear Reader,

I’m standing in a massive conference room, a CEO either side of me.

Both were inside company marketing booths, pitching their shares to anyone that drifted over to them.

Hundreds of potential investors wandered around the resource conference on the Gold Coast. It was 2017.

Little did I know that both men would go on to become millionaires many times over…

And all thanks to pretty much one company. Yep, Tesla!

The electric carmaker has risen 25,000% since 2010.

It’s also created millions for those within its orbit, such as raw material suppliers right here in Australia.

Look no further than Tim Goyder and Ken Brinsden — the two men from that conference.

Tim Goyder’s two companies, Chalice Mining and Liontown Resources, were 12 and 2 cents a share, respectively, back in 2017.

They are $7 and $1.40 now.

Tim Goyder is close to a billionaire now…or maybe he already is!

And Ken Brinsden, outgoing chief of lithium play Pilbara Minerals [ASX:PLS], owns over five million shares in PLS.

Pilbara was 15 cents a share in 2020. It’s around $2.69 now. That’s a rise of 1,693% in less than two years!

I’d call that hitting the jackpot, wouldn’t you?

Now the hunt is on for the next generation of what I call ‘potential ASX Tesla jackpots’.

These are companies that benefit from the rise of EVs…or could even deal with Tesla directly one day.

Look at these previous examples…

In 2020, ASX-listed stock Piedmont Lithium [ASX:PLL] soared more than 500% in under a month. Check it out:

The catalyst? A sales agreement with Tesla!

Just this year in February, multibillion-dollar lithium developer Liontown Resources [ASX:LTR] rallied 17% in a day after announcing a supply deal with Tesla too.

BHP has also entered into a nickel supply agreement with Tesla.

These examples show that Tesla’s clearly positioning in the resource space for its critical inputs.

That begs the question…which company could be next?

And even if it never happens, Tesla’s surging sales are lifting all companies on the same tide of electrification, batteries, renewables, and decarbonisation.

We want to be dancing here.

And I’ve found three potential plays for you!

More millions are up for grabs here

No doubt you’ve heard about the massive boom in lithium stocks and battery plays since 2020 here on the ASX.

It’s no wonder.

The lithium price is up a staggering 1,653% in the last 10 years.

Tesla sold only 2,650 sedans for the entire year in 2012. They delivered nearly a million in 2021!

They expect car sales to rise, on average, 50% per year.

You know what that means…

Batteries, batteries, batteries!

The volume of batteries has been on an upward march since 2015. See for yourself:

The difference today is that practically every carmaker in the world is now competing with Tesla.

They’re all bidding on a shrinking supply of battery metal assets and available supply. So…

Get ready for the bids to come

It’s a situation so tight that automakers might shift into buying mines directly.

Tesla CEO Elon Musk said it himself on 9 April, when he tweeted:

‘Price of lithium has gone to insane levels! Tesla might actually have to get into the mining & refining directly at scale, unless costs improve.’

Tesla has already announced deals with ASX companies BHP, Liontown Resources, Syrah Resources, and Piedmont Lithium.

I think there will be more!

And it won’t just be with Tesla either.

Mining.com also reported on 27 April:

‘“Henry Ford…was right,” according to current incumbent CEO of Ford Motors F.N, Jim Farley.

‘The most important thing is we vertically integrate.

‘The company intends to take control of its supply chains “all the way back to the mines.”’

The companies involved will be Australia’s mining companies and global chemical converters, battery makers, and auto firms.

That means we can expect more future offtake deals, takeover offers, joint ventures, and all sorts of corporate ‘battery metals’ action on the ASX…possibly for years to come.

After all…

The lithium decade is here, says ‘Mr Lithium’

You might not know the name Joe Lowry. He’s a US-based consultant and investor who specialises in lithium.

Joe’s been a vocal commentator on this space since at least 2015, but his lithium industry experience goes back decades.

Somewhere along the line, he got dubbed ‘Mr Lithium’. And deservedly so. He correctly called today’s boom back in lithium’s dark days of 2018–19.

What’s he saying now?

The Australian Financial Review quoted him last month:

‘In the next two years, even though there will be significant growth in supply, it will be less than demand, so the gap will just continue to grow.

‘It’s simple maths. It’s like, the bus in front of me is going 50 miles per hour, I’m going 45 mph, but I’m saying I’m gonna catch it in 2025.

‘I believe there will be a day in the future when lithium is in oversupply, but it won’t be in this decade.’

It’s an incredibly exciting dynamic. But we can’t be naïve, either.

Lithium stocks have been in a bull market since 2020. Here’s a tweet showing just how incredible the price rises have been:

Boom, boom, JACKPOT!

Almost all the valuations around lithium are sky-high already.

It’s hard to find hidden gems when so many investors are chasing a sector for so long.

But I believe I’ve found one…because the stock I’m talking about is hiding in another sector.

Let me explain…

You’ve been reading the latest edition of Australian Small-Cap Investigator.

Sign up now to discover my three ‘Tesla Jackpots’…all at a EOFY knockdown price. Offer for a limited time only!

All the best,

Callum Newman,
Editor, The Daily Reckoning Australia

Dear Reader,

‘But the Earth still turns.’

Galileo Galilei, recanting his recantation

Giordano Bruno might have thought it funny. Or maybe not.

He was hanging upside down, stark naked, in the Campo de Fiori in Rome. It was 17 February 1600. A crowd had gathered to watch.

He could not call out to them…nor even beg for mercy. Because his ‘tongue was imprisoned because of his wicked words’. Those wicked words had been judged heretical by the elite of the 16th century. He held opinions ‘contrary to the Catholic faith,’ they said. He doubted that the bread and wine received in communion really were the body and blood of Christ, for example. He questioned the virginity of Mary and the idea of the Trinity. And he maintained that planets circled the sun, not the other way around.

But the church could not tolerate dissent or doubt. Its grip had been loosened by both. Henry VIII of England had broken with Rome. Martin Luther had led a ‘reformation’ movement in the German-speaking world. And Galileo was already at the University of Padua carefully watching the heavens. Later, threatened with the same fate as Bruno, Galileo denied his heresy and confirmed the Earth as the centre of the universe.

A little threat

Poor Bruno. He was too early. Too outspoken. Too inflexible. In England, he allegedly spied on ‘Catholic conspirators’, using the alias ‘Henry Fagot’ for a pseudonym. Did he find it at all amusing that he was to be roasted over a pile of burning faggots?

Or would he find it gratifying that — partly because of his martyrdom — future generations generally came to believe that it was better to listen to dissenters than to fry them? After all, Bruno was right about the heavens. Maybe he was right about other things too.

Today, the church elite poses little threat. You can take it or leave it. But the profane elite — those who rule us — cannot be ignored. And they’re gathering tinder.

The ruling caste promises miracles — abolishing poverty…eliminating terrorism…making everyone richer and more ‘equal’…controlling the Earth’s temperature. But so far, their programs have all flopped. Their wars have not made the world safer. Their ‘science’ is far from “settled”. Their rigged lending rates resulted in US$300 billion in debt, worldwide.

The whole world is now trapped. It cannot go back to ‘normal’. Normal interest rates would collapse the entire global economy. It can only go forward…living with an ‘inflation tax’ that lifts prices for essential food, shelter, and energy…and threatens millions with chaos, revolution, and starvation.

But more and more, ‘the people’ — like Giordano Bruno — are beginning to notice the failures of public policy. And more and more, the elite want to shut them up.

‘They make us sick’

‘It’s too bad,’ began a thoughtful comment from a thoughtful wife, ‘They seem to have gotten exactly the wrong idea.’

She was talking about the people who recently filled the luxury restaurants of Davos, Switzerland…and are still bellying up to bars in Washington DC and state capitals all across the nation.

She might also have had in mind all the influencers, deciders, policymakers…today’s equivalent of the Catholic hierarchy in 1600…and all those who care what The New York Times has to say.

‘All of human progress has come out of conflict, competition, debate,’ she continued:

‘Even our bodies…we competed with animals…and fended off tiny bacteria and viruses. We are rarely attacked by wild beasts anymore. But we are routinely set upon by bugs. They make us sick, but we come away with a strengthened immune system.

‘Our material progress comes from competition between enterprises — each trying to find better ways to please the customer and make more money.

‘Technological progress too comes from opposition, not obedience. Inventors and innovators try to come up with something better. Something different. Autos competed with horse-drawn carriages…iPhones competed with the pony express…central heating had to prove itself in competition with open fires.

‘Our intellectual progress comes from people with different ideas challenging one another’s arguments. Nobody has the complete and final truth. And our moral progress comes as bad ideas — like burning witches and heretics, slavery, hatred, the Übermensch and all — are confronted and rejected.

‘Our political progress is painfully slow. But if there had been no alternative, I suppose we’d all be worshiping pharaohs and pulling giant rocks across the Mojave Desert to build pyramids in Los Angeles.’

Wicked words

Elizabeth was regretting the movement to prohibit ideas that make us uncomfortable. Civilisation advances by confronting unpopular ideas, not by prohibiting them, she pointed out. And yet, today, scholars are fired. Speeches are cancelled. Websites are de-platformed. Commentators are censored. Contrary opinions are blocked as ‘misinformation’.

The idea is to create a consensus, not by free discussion, but by blocking alternative views. Those who don’t go along are branded as ‘white supremacists’ or ‘Russian assets’ or ‘science deniers’ or simply ‘deplorable’.

‘Today’s elite,’ Elizabeth concluded, ‘is a lot like the Catholic Church during the Inquisition. It believes it has the full and final truth…that science has been “settled”…and that any contrary views must not be allowed in public.

‘But at least they’re not burning dissenters — like Bruno — at the stake. At least not yet.’

Regards,

Bill Bonner,
For The Daily Reckoning Australia