New Lithium Americans Price Target After S&P/TSX Index News

It's Monday morning. Today, we'll kick off the week with the next edition of our "catching up" series for "Stocks Under $10" names with Lithium Americas (LAC) .

Remember, though the "SU $10" portfolio no longer exists as a standalone product, we have kept the series alive through this column and these positions continue to exist as a part of my own "Sargefolio." That's my own skin in the game. Win or lose, at least readers know these are my actual thoughts, my actual homework and my actual capital behind these ideas.

Shortly before I had to disappear for a week and a half in late November, Lithium Americas reported the firm's third quarter financial results. Keep in mind, if you are new to this series or this name, that Lithium Americas had no sales and has not ever made a sale. That was expected. What was not expected was the GAAP EPS print of -$0.83.

That missed by a mere 78 cents per share. Yikes. However, there was an explanation. There was always an explanation when I flunked my 11-grade chemistry tests, too. 

The deal is that of the firm's quarterly net loss of $199.161 million, $190.432 million was due to losses on financial instruments measured at fair value. Operating expenses only added up to $9.704 million. Toss in transaction costs of $643,000 and non-operating income of $1.618 million and you get to the final score. You can also see where the -$0.05 estimate came from.

There Is This

In late September/early October, news broke that the Trump administration's Department of Energy had taken a 5% stake in Lithium Americas and a separate 5% stake in the firm's Thacker Pass joint venture with General Motors (GM) . GM has a 38% stake in Thacker Pass. That site is believed to be home to the largest deposit of Lithium anywhere in the western hemisphere. The stakes were to be delivered through warrants with an exercise price of $0.01.

The firm, at that time, finalized an agreement with that same Energy Department to initiate the first $435 million draw from a previously announced $2.26 billion loan in order to support the development of the mine or mines at Thacker Pass. That mine or those mines are not set to produce until 2028, so if you're in this one with me, this is going to be a long-term investment.

China produces 40,000 metric tons of lithium per year, making that nation the world's third largest producer, but largest refiner. China refines more than 75% of the world's production. Australia and Chile are number one and two in production, respectively. The U.S. has been producing less than 5,000 metric tons of lithium, all at Albemarle's (ALB)  facility in Nevada. Thacker Pass, even in its first phase of production, is projected to be able to produce 40,000 metric tons of lithium per year, which would automatically make the U.S. a global player in this space.

News

Last week, Lithium Americas presented at the Citigroup 2025 Basic Materials Conference and revealed photos of the site at Thacker Pass that, to the untrained eye of this writer, appeared to be quite impressive. There is a lot of construction going on there as it becomes evident that the Department of Energy's money is being put to work.

On Monday morning, Lithium Americas, which is headquartered in Vancouver, British Columbia, will be added to the S&P/TSX Composite Index. The TSX Composite includes both the largest and most heavily traded stocks listed at the Toronto Stock Exchange, which exposes the firm to increased passive investment flow.

The Chart​

Almost a month ago, I drew up for you a chart of LAC that displayed a cup-with-handle pattern of bullish reversal and wrote to you that I thought that these shares had stabilized. ​While I was not exactly correct about that bullish reversal, I did get the stabilization of the equity right.

In recent days, the shares have retaken their 21-day EMA, which could get the swing crowd on board. This Is the kind of name trading at the kind of market price where I could see this group playing an influential role. The more important 50-day SMA still lies to the north at close to $6.10. That's my pivot.

At this time, I am increasing my target price from $7.25 to $7.75. Though my net basis is $5.10, I am OK adding on a hold of that 21-day EMA. My point of panic only comes should we see the 200-day SMA (currently $3.70) fail.

At the time of publication, Guilfoyle was long LAC equity.