Albemarle (ALB) Stock Up 25% In 6 Months: Here's Why

Shares of Albemarle Corporation (NYSE:ALB) have rallied around 25% over the past six months. The chemical maker has also outperformed its industry’s gain of roughly 16% to over the same time frame.

Albemarle, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $14.5 billion and average volume of shares traded in the last three months is around 1,330K. The company has an expected long-term earnings per share growth of 14.8%, higher than the industry average of 10.2%.

What’s Driving ALB?

Forecast-topping results in the last reported quarter, upbeat outlook for 2017 and strategic growth initiatives have contributed to a rally in Albemarle’s shares. Albemarle, last month, posted strong third-quarter results with both earnings and revenues topping estimates.

Albemarle also 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).

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.

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.

Stocks to Consider

Better-ranked companies in the basic materials space include Koppers Holdings Inc. (NYSE:KOP) , Kronos Worldwide, Inc. (NYSE:KRO) and Westlake Chemical Corporation (NYSE:WLK) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Koppers has an expected long-term earnings growth of 18%. The stock has gained around 27% year to date.

Kronos has an expected long-term earnings growth of 5%. The stock has gained around 119% year to date.

Westlake has an expected earnings growth of 10.6% for the current year. Its shares are up roughly 85% year to date.

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