Sociedad Quimica y Minera de Chile S.A.’s SQM stock looks promising at the moment. The company’s shares have gained roughly 11% over the past six months. It is benefiting from higher prices across its business lines and healthy demand.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.
Sociedad Quimica carries a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors.
Let’s take a look into the factors that make Sociedad Quimica an attractive choice for investors right now.
Shares of Sociedad Quimica have surged 73.6% over the past year against the 32.4% rise of its industry. It has also outperformed the S&P 500’s roughly 18% decline over the same period.
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Over the past two months, the Zacks Consensus Estimate for Sociedad Quimica for 2022 has increased around 18.6%. The favorable estimate revisions instill investor confidence in the stock.
Solid Growth Prospects
The Zacks Consensus Estimate for earnings for 2022 for Sociedad Quimica is currently pegged at $12.93, reflecting expected year-over-year growth of 530.7%.
Superior Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for Sociedad Quimica is 62.4%, well above the industry’s level of 31.6%.
Sociedad Quimica is gaining from favorable trends in the lithium market underpinned by strong electric vehicle sales. The expansion of lithium operations is also supporting the company’s lithium sales volumes. Strong demand and limited supply are also boosting lithium prices.
The company envisions lithium demand to grow at least 35% in 2022. It expects sales volumes to reach at least 145,000 metric tons this year. It expects lithium sales volumes to continue to rise in the upcoming quarters.
Iodine volumes are also being supported by growing demand following the post-pandemic recovery. In Iodine and Derivatives, the company expects significantly higher average prices on a year-over-year basis this year.
Higher realized prices and strong demand are driving the company’s results as witnessed in the second quarter of 2022. Revenues from the company’s Lithium and Derivatives segment surged more than elevenfold year over year in the quarter, driven by strong lithium sales volumes and considerably higher prices.
The Specialty Plant Nutrients segment also saw a 52% increase in sales in the quarter on the back of higher prices. The company is expected to continue to benefit from higher volumes and prices moving ahead.
Sociedad Quimica y Minera S.A. Price and Consensus
Sociedad Quimica y Minera S.A. price-consensus-chart | Sociedad Quimica y Minera S.A. Quote
Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include Livent Corporation LTHM, Albemarle Corporation ALB and Innospec Inc. IOSP.
Livent, currently sporting a Zacks Rank #1, has a projected earnings growth rate of 667% for the current year. The Zacks Consensus Estimate for LTHM’s current-year earnings has been revised 9.5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Livent’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 15.7%. LTHM has gained around 31% in a year.
Albemarle, sporting a Zacks Rank #1, has a projected earnings growth rate of 425.3% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 63.7% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 22% in a year.
Innospec, currently carrying a Zacks Rank #2, has an expected earnings growth rate of 23.5% for the current year. The consensus estimate for IOSP's earnings for the current year has been revised 6.1% upward in the past 60 days.
Innospec’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. IOSP has gained around 2% over a year.
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