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With a growth potential that’s challenging to measure, the electric vehicle (EV) market is undoubtedly one of the most exciting stories unfolding over the last several years.
And it goes without saying that investors have a massive opportunity to profit from the industry's growth trajectory over the next decade.
However, instead of investing in companies producing EVs, investors can tap into the industry from an entirely different angle by investing in companies that manufacture the materials required for EV production.
One material relied on heavily is lithium, a critical component of EV batteries.
And three companies with exposure to the material – Albemarle (ALB - Free Report) , Sociedad Quimica y Minera (SQM - Free Report) , and Livent – could all be considerations for those looking to tap into the material side of the EV market.
Let’s take a closer look at each.
Albemarle
Albemarle is a leading producer of highly-engineered specialty chemicals with three reportable segments: Lithium, Bromine, and Catalysts.
The company’s revenue growth has been aided by increased lithium prices, with the company posting year-over-year quarterly sales growth of nearly 200% in its latest quarter. As we can see in the chart below, the strength has been undeniable.
Image Source: Zacks Investment Research
Analysts have taken note of the favorable operating environment, raising their earnings expectations across nearly all timeframes over the last several months.
Image Source: Zacks Investment Research
Keep an eye out for ALB’s upcoming quarterly release scheduled for May 3rd; the Zacks Consensus EPS Estimate of $7.15 indicates a sizable 200% year-over-year uptick in earnings.
Sociedad Quimica y Minera
SQM, a Chilean chemical company, is the world’s largest lithium producer. Currently, the stock is a Zacks Rank #3 (Hold).
SQM shares provide lithium exposure paired with a passive income stream; SQM’s annual dividend currently yields a sizable 10.1%, crushing the Zacks Basic Materials sector average.
Impressively, the company’s payout has grown by nearly 60% over the last five years, reflecting a commitment to increasingly rewarding shareholders.
Image Source: Zacks Investment Research
In addition, SQM’s cash-generating abilities have seen a boost thanks to increased lithium prices; SQM generated roughly $850 million in free cash flow throughout its latest quarter, improving 280% year-over-year.
Image Source: Zacks Investment Research
Livent
Livent is a fully-integrated lithium company manufacturing lithium for applications in batteries, agrochemicals, aerospace alloys, polymers, and various industrial applications.
The company sports robust growth estimates, with earnings forecasted to soar 33% in its current fiscal year (FY23) and a further 30% in FY24. The projected earnings growth is based on forecasted Y/Y revenue upticks of 35% in FY23 and 28% in FY24.
Livent shares presently trade at a 3.4X forward price-to-sales ratio, not cheap but well below the 4.9X five-year median and highs of 10.6X in 2022.
Image Source: Zacks Investment Research
In addition, the company’s trailing twelve-month return on equity (ROE) has been on a strong uptrend over the last several years, indicating improved efficiency in generating profit from existing assets.
Image Source: Zacks Investment Research
Bottom Line
With the EV landscape expected to grow significantly, investors can tap into the market by targeting companies providing the necessary materials needed for production.
That’s precisely what all three companies above – Albemarle (ALB - Free Report) , Sociedad Quimica y Minera (SQM - Free Report) , and Livent – provide, as all three carry a high level of lithium exposure.
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Seeking Lithium Exposure? 3 Stocks Worth Considering
With a growth potential that’s challenging to measure, the electric vehicle (EV) market is undoubtedly one of the most exciting stories unfolding over the last several years.
And it goes without saying that investors have a massive opportunity to profit from the industry's growth trajectory over the next decade.
However, instead of investing in companies producing EVs, investors can tap into the industry from an entirely different angle by investing in companies that manufacture the materials required for EV production.
One material relied on heavily is lithium, a critical component of EV batteries.
And three companies with exposure to the material – Albemarle (ALB - Free Report) , Sociedad Quimica y Minera (SQM - Free Report) , and Livent – could all be considerations for those looking to tap into the material side of the EV market.
Let’s take a closer look at each.
Albemarle
Albemarle is a leading producer of highly-engineered specialty chemicals with three reportable segments: Lithium, Bromine, and Catalysts.
The company’s revenue growth has been aided by increased lithium prices, with the company posting year-over-year quarterly sales growth of nearly 200% in its latest quarter. As we can see in the chart below, the strength has been undeniable.
Image Source: Zacks Investment Research
Analysts have taken note of the favorable operating environment, raising their earnings expectations across nearly all timeframes over the last several months.
Image Source: Zacks Investment Research
Keep an eye out for ALB’s upcoming quarterly release scheduled for May 3rd; the Zacks Consensus EPS Estimate of $7.15 indicates a sizable 200% year-over-year uptick in earnings.
Sociedad Quimica y Minera
SQM, a Chilean chemical company, is the world’s largest lithium producer. Currently, the stock is a Zacks Rank #3 (Hold).
SQM shares provide lithium exposure paired with a passive income stream; SQM’s annual dividend currently yields a sizable 10.1%, crushing the Zacks Basic Materials sector average.
Impressively, the company’s payout has grown by nearly 60% over the last five years, reflecting a commitment to increasingly rewarding shareholders.
Image Source: Zacks Investment Research
In addition, SQM’s cash-generating abilities have seen a boost thanks to increased lithium prices; SQM generated roughly $850 million in free cash flow throughout its latest quarter, improving 280% year-over-year.
Image Source: Zacks Investment Research
Livent
Livent is a fully-integrated lithium company manufacturing lithium for applications in batteries, agrochemicals, aerospace alloys, polymers, and various industrial applications.
The company sports robust growth estimates, with earnings forecasted to soar 33% in its current fiscal year (FY23) and a further 30% in FY24. The projected earnings growth is based on forecasted Y/Y revenue upticks of 35% in FY23 and 28% in FY24.
Livent shares presently trade at a 3.4X forward price-to-sales ratio, not cheap but well below the 4.9X five-year median and highs of 10.6X in 2022.
Image Source: Zacks Investment Research
In addition, the company’s trailing twelve-month return on equity (ROE) has been on a strong uptrend over the last several years, indicating improved efficiency in generating profit from existing assets.
Image Source: Zacks Investment Research
Bottom Line
With the EV landscape expected to grow significantly, investors can tap into the market by targeting companies providing the necessary materials needed for production.
That’s precisely what all three companies above – Albemarle (ALB - Free Report) , Sociedad Quimica y Minera (SQM - Free Report) , and Livent – provide, as all three carry a high level of lithium exposure.