Albemarle is Friday's IBD Stock Of The Day, as the lithium play shows signs of strength, coming off mixed third-quarter earnings this week. ALB shares advanced Friday, close to an early buy point.
Charlotte, N.C.-based Albemarle is the world's largest lithium producer and one of the biggest providers of lithium for electric batteries. The company already supplies the crucial metal to EV giant Tesla. Along with its lithium segment, the chemical manufacturing company also has bromine and chemical catalyst divisions.
Albemarle stock is up about 15% for the year so far as lithium prices continue to be elevated. Lithium carbonate spot prices climbed to a record $80,000 per ton, up more than 190% from a year ago. The precious metal rose to 577,500 yuan per ton this week in China, the biggest EV market and a huge user of lithium.
The company announced on Oct. 19 that it had been awarded around $150 million worth of funds from President Joe Biden's infrastructure law to work on expanding U.S. lithium battery manufacturing.
Albemarle is also likely receive federal support through the recently signed Inflation Reduction Act, which includes millions of dollars in tax incentives for domestic battery technology. Albemarle has the only operating lithium mine in the U.S. currently.
Late Wednesday, the lithium producer topped third-quarter earnings estimates but missed on sales views. EPS surged 614% to $7.50 while revenue grew 152% to $2.1 billion. The company reported that its lower than expected revenue number was primarily a result of its bromine segment.
However, the company's lithium business surged 318% to $1.5 billion, or 72% of total company revenue.
Overall earnings and sales growth accelerated for a third straight quarter.
Albemarle had raised its full-year earnings forecast several times this year. But this time, ALB narrowed full-year revenue guidance to a range of $7.1 billion-$7.4 billion, with the top end slipping from $7.5 billion. The lithium giant also focused its full-year EPS guidance to $19.75-$21.75 vs. the previous $19.25-$22.25 range.
Albemarle Plots Decade-Long Lithium Charge With Demand Racing Past Supply
Albemarle Stock
ALB shares advanced 3.8% to 284.99 during market trading Friday, back above the 50-day line. Albemarle stock is now considered to be in consolidation with an official 308.34 buy point, according to MarketSmith analysis. However, with the stock fresh off of its earnings report, aggressive investors could use a move above the Nov. 1 high of 287.88 as an early entry point.
But the risks are elevated with the market rally volatile and under pressure.
Albemarle stock had a big shakeout on earnings. Shares slid around 6% early Thursday but rebounded, closing up nearly 3% at 274.56, nearly reclaiming its 50-day line.
That's after ALB stock shed 4.5% on Wednesday, dropping below the 50-day moving average. Lithium rival Livent late Tuesday reported strong growth but a slight sales miss, while the broader market tumbled following Fed chief Powell's hawkish statements.
Before this week's earnings, Albemarle stock had advanced more than 20% from recent lows of 231.67 on Oct. 13.
Albemarle stock has a 98 Composite Rating out of 99. It has a 93 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement that tops at 99. The rating shows how a stock's performance over the last 52 weeks holds up against all the other stocks in IBD's database. The stock's EPS rating is 91.
Livent stock rose on Friday, paring weekly losses but hitting resistance at the 50-day line.
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