Key Factors
Albemarle reported web gross sales of $1.4 billion in Q1 2024, pushed by progress in vitality storage volumes.
Analysts undertaking 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 web 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 substances firm has felt the results of an electrical automobile (EV) stoop 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 substances sector. It’s well-known for its crucial function in offering lithium for vitality storage options (learn: electrical automobile batteries). In Q1 2024, Albemarle reported web gross sales of $1.4 billion, pushed by substantial progress in vitality storage volumes. Regardless of a year-over-year decline in web 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 keeping with the Worldwide Vitality Company (IEA), the variety of EVs on the highway is predicted to achieve 230 million by 2030 underneath the said insurance policies situation, from 16 million in 2022. In a extremely aggressive market the place corporations like Tesla NASDAQ: TSLA and BYD OTCMKTS: BYDDY vie for the highest spot, good buyers flee to the suppliers of ‘picks and axes’ – in different phrases, suppliers which may be decrease on the worth chain however profit from the large EV tailwind with out all the competitors. And that is precisely what Albemarle provides.
World EV gross sales have elevated by 20% year-to-date, with China main this progress. As a crucial provider within the EV provide chain, Albemarle stands to profit considerably from this pattern. Constructive gross sales traits in Europe and North America additional bolster the corporate’s outlook.
Rising Capability
$127.76 +0.17 (+0.13%) (As of 05/28/2024 ET)52-Week Vary$106.69▼$247.44Dividend Yield1.25percentP/E Ratio46.46Price Goal$165.16 Albemarle has made vital strides in its undertaking developments, enhancing manufacturing volumes and operational effectivity. Lithium is extracted and processed in three other 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 most well-liked extraction methodology, and it occurs primarily in Chile, Argentina, and Bolivia. Albermarle’s Salar Yield Enchancment undertaking achieved a 50% working price milestone this quarter.
Onerous Rock (Spodumene) Mining: Extracting spodumene ore from mines, then crushing, heating, and chemically processing it to supply 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 bettering effectivity. Moreover, Albemarle’s concentrate on 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. Basically, the lithium trade is opaque, with bilateral contracts and negotiations that aren’t seen by the bigger market.
Albemarle promotes worth 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 yr stays robust. For FY 2024, Albemarle expects web 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 powerful liquidity place, boasting $2.1 billion in money and equivalents and $3.5 billion in whole debt.

In Brief
Investing in Albemarle does include dangers, reminiscent of fluctuations in lithium market costs and potential manufacturing quantity shortfalls. Nonetheless, these dangers are mitigated by the corporate’s ongoing productiveness enhancements, huge EV tailwind, and a powerful stability sheet.
Buyers keen on investing within the EV theme via a ‘picks and axes’ technique ought to take into account Albemarle due to its robust fundamentals and market place.
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