In a volatile market, it may seem that no sector is safe. That’s especially true as both stocks and bonds sold off by double-digits last year. But other asset classes are more mixed. Commodities held up fairly well last year, and some specific plays look set to fare well into 2023 and possibly beyond.
That’s because the rules of the commodity space can come down to supply and demand. Any change in those factors can lead to big prices swings.
While investor focus in the commodity space is often on gold or oil, some of the best winning plays could come from elsewhere. One such place is lithium. The soaring demand for the metal for use in lithium-ion batteries remains large – and growing.
One such play is Piedmont Lithium (PLL). They’re a startup mining operation that’s contracted to deliver 125,000 metric tons of spodumene concentrate to EV giant Tesla Motors (TSLA).
With EV sales rising, lithium demand and prices should continue to trend higher. That bodes well for a commodity play like Piedmont.
Action to take: Investors looking for the best winner in the EV race going forward will likely find it in a commodity player, given the high valuation of Tesla, and the lower profit margins of traditional automakers shifting to EVs.
For traders, the May $50 call, last going for about $5.25, could deliver mid-to-high double-digit returns in the coming months on a move higher in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.