LAC operates as a resource company that explores lithium deposits and is now trading at 2.1x times' Price/Book. The company is still in the developing stage, generating little revenue, and still issuing shares and burning cash. The balance sheet is good, with net cash of $395M. However, the company is burning around $82M on a trailing twelve-month basis. The demand for lithium is expected to be strong over the next few years, as its growth is fueled by a surge in electric batteries. Based on consensus estimates, sales are expected to grow strongly to around $940M in FY 2024. Overall, LAC is still in its early days. The sector was very hot, and this raised valuations substantial. It is in the 'cooling off' phase now, we think. However, we think LAC is a hold for now, and we still consider it one of the best companies for sector exposure. Note, next month LAC splits into two companies (Argentina and Americas) and we think once split investors will be quite interested in the Americas division without the political concerns of Argentina.
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