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Albemarle Corporation (NYSE:ALB) saw significant share price movement during recent months on the NYSE, rising to highs of US$185 and falling to the lows of US$141. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Albemarle's current trading price of US$151 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Albemarle’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What's the opportunity in Albemarle?
The stock is currently trading at US$151 on the share market, which means it is overvalued by 22% compared to my intrinsic value of $123.67. Not the best news for investors looking to buy! But, is there another opportunity to buy low in the future? Given that Albemarle’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
Can we expect growth from Albemarle?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Albemarle. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has well and truly priced in ALB’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ALB should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on ALB for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ALB, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
If you'd like to know more about Albemarle as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 2 warning signs for Albemarle and we think they deserve your attention.
If you are no longer interested in Albemarle, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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