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Why Albemarle Stock Advanced 11% in June

Reuben Gregg Brewer, The Motley Fool

What happened

Shares of Albemarle (NYSE: ALB) rose 11% in June, according to data provided by S&P Global Market Intelligence, easily outdistancing the S&P 500 Index's 6% advance. Don't read too much into that, however, because over the first half of 2019, the stock was actually lower by around 8%, versus a 17% advance in the index. 

So what

Albemarle stock was tracking along with the broader market until around March. That's when management announced that the timing of sales and production issues at a lithium mine would delay sales that were originally expected to occur in the first quarter. It reaffirmed its full-year guidance at the time, but the news was clearly bad, and investors reacted accordingly. 

A sign that says electric vehicles only

Albemarle's lithium helps power the electric-vehicle business. Image source: Getty Images.

The first-quarter earnings release was actually pretty good (sales advanced 6% and adjusted earnings increased 4%), given the impact of the shipment delays. And the company reaffirmed its guidance again. But investor sentiment remained negative.

Then, at a conference in late May, the company again confirmed that it was sticking with its full-year outlook, calling for 2019 top-line growth between 9% and 15% backing up an adjusted earnings advance of 12% to 20%. That update seems to have eased investor concerns to some degree, evidenced by the stock moving higher through June. 

Now what

Investor sentiment around Albemarle appears to have shifted in a positive direction in June. That said, the stock is heavily influenced by sentiment around its lithium operations. Although that's only one of three main divisions, Wall Street is paying very close attention to any news that might affect this key battery ingredient. If you decide to step aboard here, expect price volatility to continue even if the company's fundamentals appear to remain strong.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.