Albemarle (ALB) Shares Up 11% in 3 Months: What's Driving It?
Albemarle Corporation’s ALB shares have popped 10.8% over the past three months. The company has also outperformed its industry’s rise of 3.8% over the same time frame. Moreover, it has topped the S&P 500’s 7.7% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.
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ALB Rides on Strong Lithium Demand
Albemarle is benefiting from higher volumes in its lithium business. Higher customer demand, new capacity and plant productivity improvements are supporting volumes. The La Negra III/IV expansion in Chile and an increase in tolling volumes to meet rising customer demand are contributing to higher volumes as witnessed in the first quarter of 2023. ALB envisions continued global shift to electric vehicles to drive a 35-55% year-over-year rise in net sales in 2023.
The company is also strategically executing its projects aimed at boosting its global lithium conversion capacity. It remains focused on investing in high-return projects to drive productivity. The company is well placed to gain from long-term growth in the battery-grade lithium market.
Albemarle's Kemerton I lithium hydroxide conversion plant in Western Australia achieved first product in July 2022. Kemerton II has also achieved mechanical completion and the plant is progressing through the commissioning phase. ALB has also announced the final investment decision to build Kemerton III and IV. The acquisition of the Qinzhou plant in China will also boost the growth of conversion capacity and drive lithium volumes.
Moreover, the company recently announced the site for its lithium mega-flex facility in Chester County, SC. The new hydroxide facility will include an initial investment of $1.3 billion or more, enabling the company to meet the increasing demand for electric vehicles and lithium-ion batteries.
Albemarle's Mega-Flex plant will process various lithium feedstock, that includes recycled batteries, to manufacture roughly 50,000 metric tons of battery-grade lithium hydroxide annually. The capacity can be increased to 100,000 metric tons and support the manufacture of about 2.4 million electric vehicles yearly. The facility also aligns with the Inflation Reduction Act, which promotes the localization of crucial minerals in North America.
The company stated that the new facility is designed to boost the production of lithium resources in the United States, which will contribute to the clean energy revolution and enhance proximity with its customers as the North American supply chain expands.
Albemarle is also benefiting from cost-saving and productivity initiatives. Its cost actions are expected to support its margins in 2023.
Albemarle Corporation Price and Consensus
Albemarle Corporation price-consensus-chart | Albemarle Corporation Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include L.B. Foster Company FSTR, Gold Fields Limited GFI, and Linde plc LIN.
L.B. Foster currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for FSTR's current-year earnings has been stable over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
L.B. Foster’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 140.5%, on average. FSTR has gained around 8% in a year.
Gold Fields currently carries a Zacks Rank #1. The Zacks Consensus Estimate for GFI’s current-year earnings has been revised 4% upward in the past 60 days.
The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, reflecting an expected year-over-year growth of 8.3%. Gold Fields’ shares have rallied roughly 52% in the past year.
Linde currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 4.4% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN’s shares have shot up roughly 30% in the past year.
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