Doubling My Money

As-salamu alaykum, I hope you are doing well. Today I'm going to cover a position and a thesis that I have that I think will probably 2x in the next 12 to 18 months at least. So that is at least the 2x. So we'll cover my thinking behind this position and if you appreciate these types of videos be sure to leave a like, I'd really appreciate that. So the thesis is somewhat contrarian in timing since the industry invested in is not a popular one as of current, although it is known for going through cycles so it's not really that surprising. Before I get started, now financial advice, be sure to do your own due diligence before making any investing decisions. So let's talk about this thesis. So by 2030 it is expected that global demand for lithium batteries is expected to increase more than fivefold. This takes into account basically demand from power storage, from batteries, not just traditional power storage but also electric vehicles. That being said, a headline kind of caught my attention today and that is the advancement that we're seeing in humanoid robots is something unprecedented. This will be the worker of the future, the labor worker of the future. We saw Boston Dynamics, for example, release their electric-powered robot and this robot will have a battery associated with it or how else it's going to operate and that battery is likely to be lithium-based as most new batteries are. So the fivefold increase in battery demand, as I mentioned, does not take into account the demand from humanoid robots which I think will increase the battery demand substantially and demand for lithium. There's already a deficit in lithium that is growing. So if you look at lithium metal production, it's forecast to become a critical bottleneck for lithium metal battery cells in 2024 and you can see that this deficit is actually set to increase with time. Most profitable miners are cutting back on investing. So because of the price decline that lithium has experienced, a lot of times the producers are not able to cover their cash costs, let alone their costs including the depreciation of the mines themselves and the investments that they have in those mines. And so when companies are cutting back on their capital expenditures, this tells you that the current price is unsustainable. So if demand is going to increase, supply needs to increase. If supply can't increase because the price does not support it, the price does not support reinvesting and expanding the supply output, then the price has to move. Eventually it has to move. So the capital expenditures that I showed you was from Albert Marley which is one of the largest, if not the largest, lithium producer globally and the CEO says at today's prices, the economics for new greenfield projects, particularly in the West, are not supported. So we think that the prices today are unsustainable. They're below operating cash levels of some assets that are currently operating and they're definitely below reinvestment levels. So the demand picture suggests that supply needs to increase to meet the demand. Right now with the investments that we have in terms of lithium mining, we're not going to be able to meet demand. So without the price increasing, the expansion of output capacity is not going to happen. So we'll eventually experience a price increase in lithium in a big way. That's just simple economics. And we have actually experienced a slight rebound in the price of lithium since the start of March. Nothing to write home about, certainly well off still the highs for lithium that we experienced in 2021. But there is sort of light at the end of the tunnel, which brings us to the lithium play, the lithium miner play that we have in our PIF growth portfolio, which is Piedmont Lithium, ticker symbol PLL. So I'm going to go over sort of back of the napkin valuation here. So the market cap as we speak is around $273 million. Average revenue estimate for 2024 is $130 million. So I take the average of the low and the high and average revenue estimate for 2025 is $173 million. Now, if we use the company low in terms of a multiple, if we use the lowest multiple that this company had for the last three years, since it started generating revenue, 5.8 was that low. So if we use that low December, 2024 share price has us around $39, 2025 December share price is $52. Now keep in mind the current share price is around $14, give or take. So that's a, that's a big upside. And now if we use the average using the peer average, which is 2.3 price to sales. Now the peer average is typically not a good thing to use because different companies have different characteristics about them. They have different growth potential. A lot of them are not necessarily pure lithium plays like Piedmont is, is so they have other things going on. And a lot of them don't have the same contracts that Piedmont Lithium has, whether it's, you know, with Tesla or with different minds. And so, you know, I think the best, the best comparison would be to compare with the price to sales of the company over an entire cycle and see what the average there was. But if you use the peer average, just to take into consideration a more bearish scenario and keep in mind, if we do reach the peer average, this will be a level that we've never reached for this company. So 2.3 price to sales is well below even half the 5.8 price to sale, which was the lowest that this company has experienced. So even if we use this bearish scenario, we have a price per share for December of 2024 of 1550 for December, 2025, 2060. So the price target for December, 2025, you take all of that into consideration for us is around $36, which is more than double the current price of $14. So this is again, back of the napkin math. If you want to see our buy below, sell above prices for Piedmont Lithium, do become a PIF member. You see basically trade for trade, what we invest in when we make the trade. And you can also follow our dividend and crypto portfolios as well. So with that being said, let's go to questions. Why would you consider MicroStrategy to be non-Sharia compliant? So I don't look at debt-to-market cap. I don't think most people look at debt-to-market cap. I think you're probably mean to say debt-to-equity, but I don't like to look at debt-to-equity either. I like to look at the interest income, interest expense and interest income and interest expense don't qualify it for investing. It's certainly very reliant on interest bearing debt for its business model to work. So that's just something I don't want to be a part of. Thanks. I'm glad you're enjoying it. Azar, can you say the market is going bananas? Hope that crypto will save us. Inshallah, there will be a recovery in Bitcoin. People that are very bearish on coin or Bitcoin miners because of their price action in the last week should perhaps not be in these assets altogether because they're very volatile. So if your sentiment is going to change from neutral to bearish or bullish to bearish based on price action, you should probably go for a less volatile asset. You think CLSK will outperform Mara? You know, CLSK, I've spoken about this before on this channel. We had it. Alhamdulillah, we made some good money on holding it and we sold it exactly when we should have sold it based on the price performance afterwards. But it's not out of the question adding it back depending on how low its valuation goes. But I do think that there's just a lot of dilution that's going to happen with regards to CLSK. Marathon has been a perpetual disappointer when compared to other Bitcoin miners. So it's not really high on my list. We do have a sort of a score that we assign for each Bitcoin miner that updates automatically based on their price and any updated information we have about it. So we like to keep track of our ranking of miners and make decisions accordingly. Thoughts on Cisco? Perpetual underperformer as well. Naturally a fan. I may end up cutting my position in Cisco substantially. It's already the smallest position we have in our dividend portfolio. But it has been a perpetual under performer and there are some other opportunities that may be even more attractive. Abdullah asks, my visa status limits me to a certain number of trades per week. Interesting. I didn't know that was a thing. Do you make frequent trades per week? No, we don't make frequent trades per week. Not more than five. But sometimes we may. But normally it's less than five. What's the outlook on Tesla given Musk's comment on stalling innovation until he owns 25%? The outlook is still very good. I think they have a lead in full self-driving. I would be surprised if Musk doesn't get his way. There is a lot of key man risk with regards to Tesla and its association with Musk. I think Musk adds at least a few hundred billion dollars to Tesla's market cap. And so I think eventually he will get to what he's asking for. And to be honest, he kind of deserves it in terms of the value that he brings to the company. And I think that having him lead is a good idea. I can't really think of anyone else that should have more influence over that company. Why did you leave Turkey? I'll talk about that next time. Nice t-shirt. Thank you. I appreciate it. Thank you for coming. Leave a like if you enjoyed this live and you'd like to see more coverage of specific names as opposed to just general market commentary. And if you think of other topics that you'd like me to cover, I'd be happy to review your suggestions and take them into account. Until next time, make sure to take care of yourself. As-salamu alaykum and peace be upon you all.