Markets
ALB

Albemarle Scales New 52-Week High: What's Driving it?

Shares of chemicals maker, Albemarle CorporationALB touched a fresh 52-week high of $124.32 yesterday, before retracing to close the day at $123.85.

Albemarle has a market cap of roughly $13.7 billion and average volume of shares traded in the last three months is around 1,374.6K. The company has an expected long-term earnings per share growth of 12.3%.

Albemarle has outperformed the industry it belongs to over a year, partly reflecting its forecast-topping earnings performance and its strategic growth initiatives. The company's shares have rallied around 62.8% over this period, compared with roughly 24.1% gain recorded by the industry.

Driving Factors

Upbeat prospects for the lithium business are driving Albemarle. The company remains committed to strengthen its lithium business and is well placed to leverage strong expected growth in the battery-grade lithium market.

China is considering an eventual ban on production and sales of cars that run on diesel or gasoline, per a report from the country's official news agency Xinhua, released on Sep 10. The move is part of Beijing's efforts to reduce carbon emissions and pollution and is also aimed at promoting the development of electric and hybrid vehicles. The news appears to have provided a boost to Albemarle's shares yesterday.

Albemarle is seeing significant momentum in its lithium business. Sales from its Lithium and Advanced Materials unit jumped 36% year over year to $317.9 million in the last reported quarter, supported by favorable pricing and higher sales volume.

The buyout 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.

The company's Talison joint venture in Australia is also expanding 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.

Albemarle, in early 2017, also agreed to amend its lithium production rights agreement with the Chilean Economic Development Agency to extend the term of the deal and increase the company's authorized lithium quota at its facility in the Salar de Atacama, Chile. The amended agreement offers Albemarle with adequate lithium to make more than 80,000 metric tons of technical and battery grade lithium salts annually over the next 27 years at the company's expanding battery grade manufacturing plants in La Negra, Antofagasta.

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, last year, sold its Chemetall Surface Treatment unit to German chemical giant BASF BASFY for around $3.2 billion. These divestments led to significant cash generation for Albemarle, allowing it to cut debt and strengthen its balance sheet.

Albemarle currently carries a Zacks Rank #3 (Hold).

Albemarle Corporation Price and Consensus

Albemarle Corporation Price and Consensus | Albemarle Corporation Quote

Stocks to Consider

Stocks in the basic materials space worth considering include Kronos Worldwide Inc KRO and Kraton Corporation KRA , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Kronos Worldwide has expected long-term earnings growth rate of 5%.

Kraton has expected earnings growth of 7.2% for the current year.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BASF SE (BASFY): Free Stock Analysis Report

Albemarle Corporation (ALB): Free Stock Analysis Report

Kronos Worldwide Inc (KRO): Free Stock Analysis Report

Kraton Corporation (KRA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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.

In This Story

ALB KRA KRO BASFY

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More