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6 Reasons that Make Albemarle (ALB) a Solid Choice Now

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AlbemarleALB has been performing well of late. The company has a market capitalization of around $12.2 billion and is a premier specialty chemicals maker with leading positions in attractive end markets globally.

Albemarle, a Zacks Rank #2 (Buy) stock, has seen its shares pop roughly 28% year to date. If you haven't taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

What's Working in Favor of Albemarle?

An Outperformer: Albemarle has outperformed the Zacks categorized Chemicals-Diversified industry over a year, partly reflecting its forecast-topping earnings performance and its strategic growth initiatives. The company's shares have rallied around 31.5% over this period, compared with roughly 22.2% gain recorded by the industry.

Estimates Moving Up: Annual estimates for Albemarle have moved north over the past three months, reflecting analysts' confidence on the stock. Over this period, the Zacks Consensus Estimate for 2017 has increased by around 3.8% to $4.33 per share. The Zacks Consensus Estimate for 2018 has also moved up 3.3% over the same timeframe to $4.98.

Positive Earnings Surprise History: Albemarle has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in all the trailing four quarters, delivering a positive average earnings surprise of 8.97%.

Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for 2017 for Albemarle is currently pegged at $4.33 per share, reflecting an expected year-over-year growth of 21.2%. Moreover, earnings are expected to register a 15.1% growth in 2018. The stock also has a long-term (3-5 years) expected expected earnings per share (EPS) growth rate of roughly 14.5%, higher than the industry average of 9.3%.

Upbeat Outlook: Albemarle, in its first-quarter earnings call, said that it is more optimistic about 2017 based on a strong start in Lithium and Bromine Specialties and favorable outlook for both businesses. The company raised sales and earnings outlook for 2017. It now expects net sales in the band of $2.9-$3.05 billion (up from $2.8-$2.95 billion expected earlier) and adjusted earnings per share of between $4.20 and $4.40 (up from $4.00-$4.25 per share) for 2017. Adjusted EBITDA for the year is also expected to be between $835 million and $875 million, also an increase from $800-$840 million expected earlier.

Growth Drivers in Place: Albemarle remains focused on strengthening its lithium business and is well placed to leverage strong expected growth in the battery-grade lithium market. The company's Talison joint venture in Australia has approved the expansion of lithium concentrate production at its Greenbushes mine. The expansion will double the lithium carbonate equivalent capacity at Greenbushes from 80,000 metric tons per year to more than 160,000 metric tons.

Moreover, the acquisition of the lithium assets of Jiangxi Jiangli New Materials Science and Technology Co. Ltd. has allowed Albemarle to supply premium lithium salts to an expanded global customer base and accelerated the company's ability to meet its goal of capturing 50% of the growth in the lithium industry.

Albemarle is also selling non-core businesses and assets to boost growth opportunities and focus on its key businesses. As part of this move, the company has sold its Chemetall Surface Treatment unit to German chemical giant BASF BASFY for around $3.2 billion. Albemarle also completed the divestiture of the tribotecc metal sulfides business to Treibacher Industrie AG, as a strategic plan to focus on its core bromine, lithium, catalysts and surface treatment businesses.

Albemarle Corporation Price and Consensus

Albemarle Corporation Price and Consensus | Albemarle Corporation Quote

Some Other Stocks to Consider

Other well-placed companies in the chemical space include Kronos Worldwide, Inc. KRO and Innospec Inc. IOSP , both of which carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Kronos has an expected earnings growth of 354.8% for the current year.

Innospec has an expected earnings growth of 7.9% for the current year.

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BASF SE (BASFY): Free Stock Analysis Report

Albemarle Corporation (ALB): Free Stock Analysis Report

Kronos Worldwide Inc (KRO): Free Stock Analysis Report

Innospec Inc. (IOSP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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