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Bull of the Day: Albemarle (ALB)

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Albemarle Corp. (ALB - Free Report) is one of the rare companies that is raising its earnings outlook for 2022. This Zacks Rank #1 (Strong Buy) is a leader in the red-hot lithium market.

Albemarle is a global specialty chemicals company with customers in 100 countries. It has a leading position in lithium, bromine and refining catalysts.

Raised Full Year Guidance

On May 23, Albemarle raised its full year guidance just 3 weeks after it released first quarter earnings on May 4, based on completion of additional lithium contract renegotiations.

Lithium is used in EV batteries, fueling strong demand.

"Over the past 12 months, we've made significant progress in renegotiating more variable-priced contracts with our lithium customers.  Implementation of these contracts is a key driver of the expected year-over-year improvement in our financial results," said Albemarle CEO Kent Masters.

"We now expect full-year 2022 adjusted EBITDA to be up more than 160% from prior year based on favorable market dynamics for our Lithium and Bromine businesses.  Both businesses are critical for transitioning to greener energy and advancing electrification and digitalization," he added.

Albemarle revised its sales guidance up to a range of $5.8 billion to $6.2 billion from $5.2 billion to $5.6 billion.

Earnings are now expected in the range of $12.30 to $15.00, up from the prior guidance of $9.25 to $12.25.

According to a presentation given at the Jefferies Renewable Energy Conference on May 24, Lithium makes up about 45% of net sales, Bromine 34% and Catalysts 21%.

Focused on Growth

While Albemarle has rewarded shareholders by raising its dividend 28 consecutive years, it's focus in 2022 is on growth.

It expects to spend $1.3 billion to $1.5 billion on 2022E CAPEX.

Shares are Cheap in 2022

Analysts still haven't upgraded their estimates on the company's recent revisions. But you can see from the price and consensus chart that earnings are expected to soar this year and next.

Zacks Investment Research
Image Source: Zacks Investment Research

Yet shares are up just 4% on the year, although they've gained 21% in the last month after posting solid earnings.

Albemarle has a PEG ratio of just 0.9. A PEG ratio under 1.0 indicates that a company has both growth and value.

It's dividend is currently yielding 0.7%.

In these uncertain times, Albemarle is one company that is bullish about 2022. It should be a stock on your short list.

[Tracey currently owns ALB in her Zacks Insider Trader portfolio. She has no position in her personal portfolio.]


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