Each day that goes by, it seems like Piedmont Lithium (NASDAQ:PLL) wants to break out. We keep seeing the stock flirt with a move higher, but it has not made any substantial gains. Both traders and investors are wondering if Piedmont Lithium stock is worth owning.
If you haven’t heard of Piedmont Lithium stock, don’t fret. This company is considered small, as its market capitalization is just $388 million.
However, its financials have some momentum and its technicals are somewhat attractive. Let’s explore this name and see if it’s worth buying.
Trading Piedmont Lithium Stock
The technicals of Piedmont Lithium stock are not completely attractive, due to its recent action.
Piedmont Lithium stock shot higher in late September, bouncing rather violently between $25 and $50. Eventually, it failed to hold the $36 area and sank. By the end of October, though, the stock finally bottomed and began a slow but sure trek higher.
In mid-November, Piedmont threatened to break out over $30. Holding over all of its major moving averages, it appeared ready to move back to $36-plus.
Falling below $27 did not do Piedmont Lithium stock any favors, though.
Now it’s below these major moving averages, while it’s also stuck below the $30 resistance level. For bulls, the shares need to stay above $22.50, although they’d be much more attractive if the stock could reclaim $27 and these moving averages.
It would be even more attractive if Piedmont Lithium stock could clear $30 and close above that mark, putting $36 in play. If the shares surpass $37.50, they may reach $40. But it all starts with the shares reclaiming key levels and rotating over resistance.
Because Piedmont is such a small company, not many analysts are covering it. That’s okay, but it does make it hard to figure out the company’s growth outlook.
In other words, there are no meaningful revenue estimates or earnings expectations from analysts.
But of course, since Piedmont is publicly traded, there is always some information to analyze. In the most recent update from Piedmont, the company told investors everything they really need to know.
Piedmont recently raised cash, putting more than $57 million in its coffers. However, inking a deal with Tesla (NASDAQ:TSLA) was more important. The company noted that it had:
Signed (an) agreement with Tesla, Inc. (“Tesla”) for the supply of spodumene concentrate from Piedmont’s North Carolina deposit to Tesla for an initial five-year term on a fixed-price binding purchase commitment from the delivery of first product.
The company’s president and CEO, Keith Phillips, added:
Our agreement with Tesla highlights the strategic importance of Piedmont’s unique American spodumene deposit and confirms the trend toward spodumene as the preferred feedstock for the lithium hydroxide required in high-high-nickel batteries. Our relationship with Tesla represents the start of the first U.S. domestic lithium supply chain.
A deal with the leading electric-vehicle (EV) company in the world is a major step in the right direction. That’s particularly true because Piedmont isn’t generating any revenue at the moment.
Obviously, Piedmont is still a speculative play. But if investors blend the stock’s technicals with the company’s story, it can still climb meaningfully. Its situation is not very different from that of Virgin Galactic (NYSE:SPCE), which is paying off quite handsomely now.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.