For investors seeking momentum, Global X Lithium ETF (LIT - Free Report) is probably on radar now. The fund just hit a 52-week high of $31.90. Shares of LIT are up roughly 37.1% from their 52-week low price of $23.26/share.
But could more gains be ahead for this ETF? Let’s take a quick look at the fund and the near-term outlook to get a better idea on where it might be headed:
LIT in Focus
The fund looks to track the performance of the largest and most liquid listed companies that are active in the exploration and/ or mining of Lithium or the production of Lithium batteries. The U.S. takes the top spot in the fund with about 41.2% exposure. The fund charges 76 bps in total fees (see all Materials ETFs here).
Why the Move?
The fate of the metal lithium is often associated with electric cars and in turn with electric car maker Tesla Motors (TSLA - Free Report) . This is because this material is used in making lithium-ion batteries that power electric cars.
Tesla incurred a narrower-than-expected second-quarter loss on August 2, helped by strong revenues. According to Thomson Reuters, adjusted loss per share of $1.33 beat analysts’ expectation of $1.82. Sales of $2.79 billion breezed past the $2.55 billion expected.
However, Tesla’s loss of $2.04 per share (accounting for stock-based compensation and other potential BNRI) actually came in wider than Zacks Consensus Estimate of $2.00 loss per share. Overall, optimism around Tesla explains the surge in the lithium ETF.
More Gains Ahead?
The fund has a positive weighted alpha of 32.10. A positive weighted alpha hints at more gains. As a result, there is definitely still some promise for investors who want to ride on this surging ETF.
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