The electric vehicle landscape has evolved far beyond just Tesla (NASDAQ:TSLA), as car makers, truck and van manufacturers, and battery producers abound . Follow the the whole EV food chain and you’ll end up at raw material plays, like Westwater Resources (NASDAQ:WWR).
Westwater says it has a process to purify graphite into anodes for batteries. It also controls a large deposit of natural graphite in east Alabama.
As the Trump Administration prepared an executive order demanding domestic supplies of critical materials, shares in WWR stock shot up, to a high of $11.80.
They’re set to open for trade on Dec. 14 at about $5.00. The question is, have investors missed the boat, or will patience be rewarded?
Louis Likes WWR Stock
Usually, when our Louis Navellier touts a company, other InvestorPlace writers shout “amen.”
He’s very good at spotting opportunities.
In October he pounded the table for Westwater after it sold its uranium assets to go “all-in on graphite,” as its press release on the sale said.
But this is a long-term play.
Westwater, based in Centennial, Colorado, now has $50 million in capital from stock sales to open a graphite processing plant by 2022. It plans to start mining graphite in eastern Alabama by 2028.
The business will start by importing 30 metric tons of the stuff from a plant in Germany. This will test the Westwater process, which involves roasting the ore, leaching acid from it, then heating it to create a product that the company says will be 99.95% pure. With all those graphite anodes, from powering flashlights to Tesla trucks, there should be a ready market.
Navellier admits this is all speculative. But the business plan makes sense. You can ride the excitement over electric vehicles, hope the process works and Westwater can sell the German graphite for a good price, then watch Alabama operations start up. By 2028, if this is a billion-dollar company, you’ve hit a “10-bagger,” since the company’s market cap today is about $100 million.
If you bought when Navellier’s story first came out you’re already up 18%.
No One Else Likes It
Yet, despite Louis’ endorsement, when other InvestorPlace writers looked at Westwater, they’ve been unanimous in turning thumbs down.
Last month, Vince Martin warned that Westwater needs “more than hype to survive.” Alex Sirois called the company’s road to riches “far-fetched.”
Earlier in December, Larry Ramer called it “unappealing at current levels.” Muslim Farooque wondered whether it will even be profitable in 2023.
Chris Tyler, who looked at the technical indicators on Westwater’s stock chart, also warned readers away.
The Wall Street View
During a conference call to discuss the most recent quarter results, Westwater CFO Jeff Vigil acknowledged the hype. He said the company is backed by Cantor Fitzgerald and Lincoln Park Capital. He said it has the money to execute its initial business plan.
CEO Chris Jones, who has been in mining and energy for 30 years, said the U.S. now produces only 11,000 metric tonnes of graphite a year and will need 124,000 in 2030. China produces about 80% of current supply, and most of the raw material now comes from Africa. He said Westwater has also found vanadium in Alabama and could start exploiting that next year.
The key is Westwater’s process. Answers on that should come over the next two years. If it works, celebrate. If it doesn’t, throw in your hand and try something else.
The Bottom Line
In a world where doughnut shops and distilleries can get equity from small investors, Westwater is a throwback.
It’s pure speculation but you can get 100 shares for just $600, there are fewer than 17 million shares total, and if the process works you may profit in three years. These are industry pros with a plan, not money-losing SPAC sharpies. You can do worse.
On the date of publication, Dana Blankenhorn did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of the environmental thriller Bridget O’Flynn and the Bear, available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn.
