This chemical company beat analysts’ estimates by $0.26 last quarter. For 2016, 17 analysts have raised their EPS forecasts for the company, and 14 have done so for next year.
Albemarle (ALB)
From The Complete Investor
Albemarle (ALB) has long been a leading producer of specialty chemicals used in oil refining and to treat metal, plastic, and glass surfaces. Now after its recent acquisition of Rockwood Holdings, it’s also the world’s largest producer of lithium.
While Albemarle’s specialty chemicals should contribute steady growth, lithium should vault the company into the league of very fast growers. Lithium used to be used mainly in ceramics and as a lubricant, resulting in steady but unremarkable growth. But that has changed big time.
Both very light and able to carry an electrical charge, lithium is ideal for batteries and especially rechargeable batteries, increasingly critical in a world where energy has to be stored. Not only do lithium batteries dominate consumer electronic devices, from smartphones to smart watches to laptops, they’re the battery of choice for electric vehicles. And down the road, lithium could be used to store electricity from renewable sources that would then be funneled to a smart grid.
The market for the metal already is growing by nearly 20% a year and is so enormous that growth could easily accelerate into the next decade and perhaps beyond.
With lithium holdings everywhere from Australia to Argentina to Chile to Zimbabwe, Albemarle has the brass ring in hand and a chance at the gold ring if it can more fully integrate its holdings with battery making. At worst, growth will likely be in the upper teens; if the company can vertically integrate, look for a lot more. A relatively small company with a fair amount of debt, Albemarle carries undeniable risks, which are easily outweighed by its tremendous leverage to the new energies slated to become increasingly essential.
Buy Albemarle.
Stephen Leeb, PhD. and Genia Turanova, The Complete Investor, www.completeinvestor.com, 866-833- 2070, June 2016