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Albemarle Touches New 52-Week High on Solid Prospects

Zacks

Shares of chemicals maker, Albemarle ALB scaled a fresh 52-week high of $117.13 yesterday, before retracing to close the day at $116.54.

Albemarle has a market cap of roughly $12.9 billion and average volume of shares traded in the last three months is around 1,072.1K. The company has an expected long-term EPS growth of around 14.5%.

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 35.5% over this period, compared with roughly 19.1% gain recorded by the industry.



What's Driving ALB?

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 also bumped up its sales and earnings forecast for 2017. It now sees net sales in the range 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.

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%.

Albemarle remains committed to strengthen its lithium business and is well placed to leverage strong expected growth in the battery-grade lithium market. The company, earlier this year, said that its 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.

The buyout of the lithium assets of Jiangxi Jiangli New Materials Science and Technology Co. Ltd. has also 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, 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 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. These divestments also led to significant cash generation for Albemarle, allowing it to cut debt and strengthen its balance sheet.

Albemarle currently carries a Zacks Rank #2 (Buy).

Albemarle Corporation Price and Consensus


Albemarle Corporation Price and Consensus | Albemarle Corporation Quote

Other Stocks to Consider

Other well-placed companies in the chemicals space include Eastman Chemical Company EMN and FMC Corporation FMC, both sporting a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Eastman Chemical has an expected long-term earnings growth of 7.9%.

FMC has an expected long-term earnings growth of 11%.

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