Key Factors
Albemarle reported internet gross sales of $1.4 billion in Q1 2024, pushed by progress in vitality storage volumes.
Analysts mission the worldwide EV market to develop to 230 million automobiles by 2030, benefiting Albemarle considerably.
The corporate’s strategic initiatives and productiveness enhancements led to $90 million in value financial savings in Q1 2024.
Albemarle’s monetary outlook for FY 2024 stays robust, with anticipated internet gross sales between $5.5 billion and $7.6 billion.
5 shares we like higher than Albemarle
Very like the shares we have been writing about this week, like Ethan Allen NYSE: ETD, this chemical compounds firm has felt the consequences of an electrical automobile (EV) hunch in the previous couple of quarters. However there are indicators issues are about to alter.
Albemarle Company NYSE: ALB is a world chief within the specialty chemical compounds sector. It’s well-known for its vital function in offering lithium for vitality storage options (learn: electrical automobile batteries). In Q1 2024, Albemarle reported internet gross sales of $1.4 billion, pushed by substantial progress in vitality storage volumes. Regardless of a year-over-year decline in internet gross sales and a considerable drop in adjusted EBITDA, the corporate has been proactive in implementing strategic initiatives.Get Albemarle alerts:Signal Up
EV ‘Picks and Axes’
The worldwide shift in the direction of renewable vitality and the transition to electrical automobiles are vital traits benefiting Albemarle.
In accordance with the Worldwide Power Company (IEA), the variety of EVs on the highway is anticipated to succeed in 230 million by 2030 underneath the acknowledged insurance policies state of affairs, from 16 million in 2022. In a extremely aggressive market the place firms like Tesla NASDAQ: TSLA and BYD OTCMKTS: BYDDY vie for the highest spot, good traders flee to the suppliers of ‘picks and axes’ – in different phrases, suppliers which may be decrease on the worth chain however profit from the huge EV tailwind with out the entire competitors. And that is precisely what Albemarle affords.
World EV gross sales have elevated by 20% year-to-date, with China main this progress. As a vital provider within the EV provide chain, Albemarle stands to learn considerably from this development. Constructive gross sales traits in Europe and North America additional bolster the corporate’s outlook.
Rising Capability
$128.51 +0.92 (+0.72%) (As of 12:33 PM ET)52-Week Vary$106.69▼$247.44Dividend Yield1.25percentP/E Ratio46.73Price Goal$165.16 Albemarle has made vital strides in its mission developments, enhancing manufacturing volumes and operational effectivity. Lithium is extracted and processed in three alternative ways:

Brine Extraction: Pumping lithium-rich brine from underground aquifers into evaporation ponds, the place it’s concentrated and processed. That is by far the preferred extraction methodology, and it occurs primarily in Chile, Argentina, and Bolivia. Albermarle’s Salar Yield Enchancment mission achieved a 50% working fee milestone this quarter.
Laborious Rock (Spodumene) Mining: Extracting spodumene ore from mines, then crushing, heating, and chemically processing it to provide lithium compounds. Spodumene mining is predominant in Australia, the place the corporate’s Kemerton I facility is being commissioned.
Clay Extraction: Mining lithium-rich clays and treating them with sulfuric acid at excessive temperatures to extract and convert lithium into usable varieties.

These developments are essential for assembly the rising demand for lithium and enhancing effectivity. Moreover, Albemarle’s give attention to productiveness has resulted in $90 million in value financial savings in Q1 2024, aligning with its annual goal of $280 million.
The corporate has additionally arrange strategic “bidding occasions” for spodumene focus and lithium carbonate. On the whole, the lithium business is opaque, with bilateral contracts and negotiations that aren’t seen by the bigger market.
Albemarle promotes value transparency and discovery out there by selling bidding occasions the place the corporate’s merchandise are purchased via an public sale course of. These occasions are designed to make sure honest pricing and supply real-time insights into market dynamics, attracting extra purchasers that worth transparency and honest play.
Monetary Outlook
Whereas Albemarle confronted challenges in Q1 2024, the corporate’s monetary outlook for the rest of the 12 months stays robust. For FY 2024, Albemarle expects internet gross sales to vary between $5.5 billion and $7.6 billion, with adjusted EBITDA projected between $0.9 billion and $2.6 billion. Regardless of the short-term setbacks, Albemarle is dedicated to its investment-grade credit standing and robust liquidity place, boasting $2.1 billion in money and equivalents and $3.5 billion in complete debt.

In Quick
Investing in Albemarle does include dangers, resembling fluctuations in lithium market costs and potential manufacturing quantity shortfalls. Nevertheless, these dangers are mitigated by the corporate’s ongoing productiveness enhancements, large EV tailwind, and a robust steadiness sheet.
Traders taken with investing within the EV theme via a ‘picks and axes’ technique ought to think about Albemarle due to its robust fundamentals and market place.
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