Albemarle Corporation (ALB - Free Report) has been performing well of late. The chemical maker, currently carrying a Zacks Rank #2 (Buy), has seen its shares surge roughly 58% year to date.
Albemarle has also outperformed the industry it belongs to over a year, partly reflecting its forecast-topping earnings performance and its strategic growth initiatives. The company’s shares have rallied around 62.4% over this period, compared with roughly 27.6% gain recorded by the industry.
If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
What’s Working in Favor of Albemarle?
Solid Q3 and Upbeat Outlook: Albemarle, earlier this month, posted strong third-quarter results with both earnings and revenues topping estimates. Adjusted earnings of $1.08 per share for the quarter beat the Zacks Consensus Estimate of $1.07. Revenues rose around 15% year over year to $754.9 million and also topped the Zacks Consensus Estimate of $737 million.
Sales in the quarter were aided by favorable impacts of pricing and higher sales volume in Lithium and Advanced Materials and Bromine segments as well as favorable currency impacts.
Albemarle raised its guidance for 2017. The company now sees full-year net sales of between $3 billion and $3.05 billion (compared with prior view of $2.90 billion and $3.05 billion), adjusted earnings per share of between $4.40 and $4.50 (compared with prior view of $4.20 and $4.40) and adjusted EBITDA of $860-$875 million (compared with $835-$875 million expected earlier).
Estimates Moving Up: Annual estimates for Albemarle have moved north over the past month, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for 2017 has increased by around 2.1% to $4.45 per share. The Zacks Consensus Estimate for 2018 has also moved up 2.6% over the same timeframe to $5.15.
Positive Earnings Surprise History: Albemarle has an impressive earnings surprise history, outpacing the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 4.3%.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for 2017 for Albemarle is currently pegged at $4.45 per share, reflecting an expected year-over-year growth of 24.5%. Moreover, earnings are expected to register a 15.8% growth in 2018. The stock also has a long-term (three-five years) expected earnings per share (EPS) growth rate of roughly 14.8%, higher than the industry average of 10%.
Growth Drivers in Place: Albemarle is seeing significant momentum in its lithium business and is well placed to leverage strong expected growth in the battery-grade lithium market. The buyout of the lithium assets of Jiangxi Jiangli New Materials Science and Technology Co. Ltd. has allowed Albemarle to supply premium lithium salts to an expanded global customer base and accelerated the company’s ability to meet its goal of capturing 50% of the growth in the lithium industry.
Albemarle is executing a number of projects that are likely to boost its global lithium derivative capacity to 165,000 metric tons by 2021. Albemarle’s Talison joint venture in Australia is expanding lithium concentrate production at its Greenbushes mine. The expansion will double the lithium carbonate equivalent capacity at Greenbushes from 80,000 metric tons per year to more than 160,000 metric tons.
Moreover, Albemarle, in September, said that it has developed a novel technology that would allow it to increase annual lithium production in Chile on a sustainable basis to as much as 125,000 metric tons of lithium carbonate equivalent without requiring additional brine pumping at its facility in the Salar de Atacama. The move is part of the company’s efforts to beef up efficiencies and sustainability of its Atacama operations.
Projects currently underway are expected to raise the company’s total annual production capacity in Chile to more than 80,000 metric tons of lithium carbonate equivalent.
Some Other Stocks to Consider
Other top-ranked companies in the basic materials space include Westlake Chemical Corporation (WLK - Free Report) , Ingevity Corporation (NGVT - Free Report) and Kraton Corporation (KRA - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Westlake has an expected long-term earnings growth of 10.4%. Its shares are up roughly 67% year to date.
Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 34% year to date.
Kraton has an expected earnings growth of 25.4% for the current year. Its shares are up roughly 66% year to date.
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