Liontown Resources Ltd (ASX: LTR) shares have unfortunately been a terrible place to invest over the past 12 months.
During this time, the lithium miner's shares have lost almost two-thirds of their value.
This has been driven by the collapse of a takeover and a significant decline in lithium prices due to softening demand and increasing supply.
Will things be better over the next 12 months? Let's see what a $10,000 investment in its shares could become.
$10,000 invested in Liontown shares
Firstly, it is worth noting that Liontown and other ASX lithium miners/developers are among the most volatile stocks on the local market. And as we have seen over the past year, this can mean big losses for investors.
As a result, an investment would arguably only be suitable for investors that have a high tolerance for risk. The good news, however, is the potential rewards could make it worth the risk for them according to analysts at Bell Potter.
Moving on, let's now look at what a $10,000 investment could get you.
With Liontown shares currently trading at 96.5 cents, a $10,000 investment would see you pick up 10,363 units.
What could they be worth?
As mentioned above, the team at Bell Potter believe that the risk/reward on offer with this lithium miner's shares could be compelling.
According to a recent note, the broker has put a speculative buy rating and $1.90 price target on its shares.
If its shares were to rise to that level, those 10,363 units would have a market value of $19,689.70. This represents a return of almost 97% and is over $9,600 more than your original investment.
Why is the broker bullish?
Commenting on its bullish recommendation, Bell Potter said:
LTR's 100% owned Kathleen Valley lithium project remains highly strategic with initial production imminent, a long mine life and located in a tier-one location. LTR has offtake contracts with top tier EV and battery OEMs. Under our modelled assumptions, we expect that LTR is fully funded to free cash flow. We have made no changes to our earnings estimates in this report. LTR is an asset development company; our Speculative risk rating recognises this higher level of risk.
Overall, this could make Liontown shares worth considering if you are looking for big returns over the next 12 months and, importantly, have an appropriate risk profile and a balanced investment portfolio.
