Valuentum Exclusive Analysis for the Discerning Investor

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Feb 21, 2024

Lithium Prices Remain Volatile; Albemarle Adjusts Long-term Demand Forecast
Image: Albemarle’s shares have faced significant pressure as a result of depressed lithium prices. Albemarle’s shares have been under significant pressure of late due to volatile lithium prices, and the firm’s cash flows have faced weakness as a result. Operating cash flow dropped to ~$1.325 billion in 2023 from ~$1.91 billion in 2022, as capital spending soared. Unless lithium prices start to better reflect the underlying demand profile ahead of it, Albemarle will likely be free cash flow negative in 2024 as well. Right now, Albemarle is facing a tough road ahead with its fundamentals largely tied to lithium prices, but the firm is positioned well for a potential lithium-price rebound. Regardless, we view Albemarle as a speculative stock and one only for the most aggressive, risk-seeking investors.

Dec 8, 2023

Dividend Increases/Decreases for the Week of December 8
Let's take a look at firms raising/lowering their dividends this week.

Oct 26, 2023

Albemarle and ASML Holding Remain Key ESG-Focused Ideas
Two of the companies included in the simulated ESG Newsletter portfolio are Albemarle and ASML Holding. Recently, concerns over the supply/demand dynamics for lithium have hurt Albemarle’s stock, but we’re being patient with this ESG-focused idea. On October 18, ASML Holding reported decent third-quarter results. We think ASML is one of the most competitively advantaged players in the semiconductor space, and we won’t be removing it from the ESG Newsletter portfolio anytime soon.

Aug 3, 2023

Albemarle Is One of the Best Growth Stories on the Market Today
Image: Albemarle is a low-cost producer of lithium derivatives, an end market that is expected to experience tremendous demand in the coming years. On August 2, Albemarle Corp. reported excellent second-quarter 2023 results that showed net sales advancing 60% and adjusted diluted earnings per share more than doubling in the quarter. For the full-year 2023, net sales are now expected to be between $10.4-$11.5 billion (was $9.8-$11.5 billion) thanks in part to continued strength in electric vehicle (EV) demand. Our fair value estimate for Albemarle stands at $257 per share, well above where shares are currently trading. We think the market is underestimating not only its growth potential but also mid-cycle levels of profitability.

Jul 14, 2023

Dividend Increases/Decreases for the Week of July 14
Let's take a look at firms raising/lowering their dividends this week.

Apr 5, 2023

Albemarle Is Looking to Buy Australian Lithium Start Up
Image: Albemarle’s shares have faced pressure as lithium prices are expected to moderate in the near term. We continue to like Albemarle’s long-term story, however. On March 27, it became public that lithium maker Albemarle is looking to bolster its future opportunities on the acquisition front, seeking to scoop up a smaller Austrailian lithium start-up Liontown Resources. Though Liontown rejected the offer, other lithium stocks, including Standard Lithium, Sigma Lithium, Piedmont Lithium, and Lithium Americas soared on the news. According to the firm’s website, Liontown’s project in Western Australia in Kathleen Valley is expected to be one of the world’s largest lithium mines, “supplying ~500,000 tonnes of 6% lithium oxide concentrate per year when it comes on stream in 2024.” Another of its prospects is also located in Western Australia (Buldania), which has a “mineral resource estimate of 15 million tonnes of 1.0% lithium oxide.” We continue to monitor developments on this front.

Feb 12, 2023

Albemarle Outlines Strong Lithium Demand Outlook
Image Source: Albemarle. Albemarle released a very promising outlook in late January, one that implies a tremendous pace of top-line expansion, profitability growth, and free cash flow generation. We’re huge fans of the outlook and believe lithium demand will continue to be robust, even as new supply comes to market. The company has called its next five years a period of “transformational growth,” where expected net sales are targeted at 2.5x 2022 levels and adjusted EBITDA is targeted to more than double. Electric vehicle demand remains robust, and Albemarle has opportunities across the end markets of mobility, energy, connectivity, and health, too. We think Albemarle remains one of the best growth stories on the market today, and we like shares.

Dec 9, 2022

Dividend Increases/Decreases for the Week of December 9
Let's take a look at firms raising/lowering their dividends this week.

Nov 6, 2022

Shares of Lithium Producer Albemarle Are Soaring So Far In 2022
Image: Albemarle's shares have rocketed higher the past few years and are soaring during 2022. We think Albemarle remains a great fit for ESG-related investment considerations, and we’re sticking with shares in the ESG Newsletter portfolio following the company’s third-quarter results, released November 2. The lithium producer remains well-positioned, and its growth rates remain fabulous in an undersupplied market. Prices for lithium can be volatile at times, but Albemarle’s financial leverage remains manageable, and the firm expects to churn out free cash flow during 2022 as it continues to invest aggressively in its business and pay out dividends to shareholders. Albemarle’s fundamental and relative share-pricing strength have been a sight to see thus far in 2022. We still like shares of Albemarle based on the high end of our fair value estimate range.

Aug 11, 2022

Albemarle Raises Guidance Yet Again, Expects to Be FCF Positive in 2022
Image Shown: Albemarle Corporation’s lithium operations have posted stellar financial performance in recent quarters and underpin the firm’s bright long-term growth outlook. Image Source: Albemarle Corporation – Second Quarter of 2022 IR Earnings Presentation. We liked what we saw in Albemarle’s latest earnings report. Albemarle is betting the farm that the supply-demand dynamics will remain favorable for lithium producers. Volume growth and favorable pricing for lithium derivatives is a powerful combination that Albemarle has effectively capitalized on so far. Lithium is a major component in lithium-ion batteries which are used to power electric vehicles (‘EVs’), battery storage facilities, consumer electronics, and much more. Should EV sales continue to grow while utilities are increasingly turning to battery storage solutions to supplement their backup power options, demand for lithium should continue to grow at a robust pace as well. Albemarle is well-positioned to capitalize on this upside, aided by its stellar operational execution. Shares of ALB yield ~0.7% as of this writing and the top end of our fair value estimate range for Albemarle sits at $309 per share.