Vale (NYSE:VALE) and Lithium Americas (Argentina) (NYSE:LAAC) Critical Comparison

Lithium Americas (Argentina) (NYSE:LAAC) and Vale (NYSE:VALE) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, analyst recommendations, dividends, earnings and risk.

Institutional & Insider Ownership

49.2% of Lithium Americas (Argentina) shares are held by institutional investors. Comparatively, 21.9% of Vale shares are held by institutional investors. 19.8% of Lithium Americas (Argentina) shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Lithium Americas (Argentina) and Vale, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Lithium Americas (Argentina)	0	4	4	1	2.67
Vale	0	4	7	0	2.64

Lithium Americas (Argentina) currently has a consensus price target of $8.21, indicating a potential upside of 150.25%. Vale has a consensus price target of $16.17, indicating a potential upside of 38.35%. Given Lithium Americas (Argentina)’s stronger consensus rating and higher probable upside, equities analysts clearly believe Lithium Americas (Argentina) is more favorable than Vale.

Risk and Volatility

Lithium Americas (Argentina) has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, Vale has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.

Valuation & Earnings

This table compares Lithium Americas (Argentina) and Vale”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Lithium Americas (Argentina)	N/A	N/A	$1.29 billion	$7.99	0.41
Vale	$42.06 billion	1.25	$7.98 billion	$1.81	6.46

Vale has higher revenue and earnings than Lithium Americas (Argentina). Lithium Americas (Argentina) is trading at a lower price-to-earnings ratio than Vale, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Lithium Americas (Argentina) and Vale’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Lithium Americas (Argentina)	N/A	-0.25%	-0.20%
Vale	23.07%	22.23%	9.71%

About Lithium Americas (Argentina)

Lithium Americas (Argentina) Corp. operates as a resource company. The company explores for lithium deposits. The company owns interests in the Cauchari-Olaroz project located in Jujuy province of Argentina. It also has a pipeline of development and exploration stage projects, including the Pastos Grandes project and the Sal de la Puna project located in Salta Province in northwestern Argentina. Lithium Americas (Argentina) Corp. is headquartered in Vancouver, Canada.

About Vale

Vale S.A., together with its subsidiaries, produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. The company operates through Iron Solutions and Energy Transition Materials segments. The Iron Solutions segment produces and extracts iron ore and pellets, manganese, and other ferrous products; and provides related logistic services. The Energy Transition Materials segment produces and extracts nickel used to produce stainless steel, electric vehicles, and metal alloys; and its by-products, such as gold, silver, cobalt, precious metals, platinum, and others, as well as copper used in the construction sector to produce pipes and electrical wires. The company was formerly known as Companhia Vale do Rio Doce and changed its name to Vale S.A. in May 2009. Vale S.A. was founded in 1942 and is headquartered in Rio de Janeiro, Brazil.