What’s Happening With Albemarle Stock?

Albemarle stock (NYSE: ALB), a chemicals company that is also one of the largest producers of lithium – a key raw material for electric vehicle batteries – has risen by about 6% over the last month, outperforming the S&P 500 which remains up by a 3% over the same period. The stock also remains up by about 55% year-to-date. The gains come amid multiple developments in the automotive industry, which has been looking to transition from gasoline-powered vehicles to electric vehicles at a quicker than anticipated pace. Governments have been doubling down on EV targets, with the Biden Administration indicating that it wants about half of all new car sales in the U.S. to be electric by the end of this decade. Mainstream automakers such as GM, Ford, and Daimler have also committed tens of billions of dollars to EV investments over the next few years. Even rental fleet operators are getting serious about EVs, with Hertz recently placing an order for 100,000 Tesla vehicles to be delivered over the next year or so.

So is Albermarle stock likely to grow in the near term? Based on our machine learning analysis of trends in the stock price over the last ten years, there is a 56% chance of a rise in Albermarle stock over the next month (twenty-one trading days). See our analysis on Albermarle Chance Of Rise for more details.

Now, is the stock worth a look for the longer term? To be sure, Albermarle’s valuation is expensive. The stock trades at almost 65x projected 2021 earnings, despite the fact that the company is only likely to grow sales by about 4% this year per consensus estimates, on account of headwinds in the company’s catalysts business. However, investors should focus more on the lithium business, which accounted for about 37% of the company’s revenues over the first half of the year. Demand is growing and lithium prices are also near all-time highs. Albermarle should be a big beneficiary, given its large scale and relatively low-cost production base. The company is looking to expand capacity further, announcing that it would acquire Chinese processing player Guangxi Tianyuan which has a total capacity of 25,000 tons per annum of lithium carbonate equivalent while outlining plans to build two other processing units in China.

Electric vehicles are the future of transportation, but picking the right EV stocks can be tricky. Investing in Electric Vehicle Component Supplier Stocks can be a good alternative to play the growth in the EV market.

[8/2/2021] Up 8% Last Week, Will Albemarle Stock Continue To Rally?

Albemarle stock (NYSE: ALB), a chemicals company that is also one of the largest producers of lithium – a key raw material for electric vehicle batteries – has seen its stock rise by about 8% over the last week (five trading days) to levels of about $205 per share. The stock also remains up by a solid 35% year-to-date. Last week’s rally appears to be driven by a strong earnings report from LG Energy Solution, the world’s second-largest battery maker, which saw EV batteries sales improve and also by news that Rio Tinto will finance the development of the $2.4 billion lithium mine in Serbia, marking the first time a mining major was investing a substantial amount into the lithium sector. Separately ALB stock has also benefited from rising lithium prices this year and a faster than expected pivot to electric vehicles amid major commitments by mainstream automakers and aggressive emission reduction targets by the government.

So will ALB stock continue to trend higher over the coming weeks and months, or is a correction looking more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price data, returns for Albemarle stock average 1.4% in the next month (21 trading days) after experiencing an 8% rally over the last five trading days. Moreover, the stock is also likely to outperform the broader S&P 500 by about 1% over the next month.

But how would these numbers change if you are interested in holding Albemarle stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test ALB stock chances of a rise after a fall and vice-versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF ALB stock moved by -5% over five trading days, THEN over the next 21 trading days ALB stock moves an average of 2.2%, with a 60.8% probability of a positive return over this period.

Also, given a -5% movement for the stock over five trading days, it has historically witnessed an excess return of 1.3% compared to the S&P 500 over the next 21 trading days, with a 52.9% percent probability of a positive excess return

Some Fun Scenarios, FAQs & Making Sense of Albemarle Stock Movements:

Question 1: Is the average return for Albemarle stock higher after a drop?

Consider two situations,

Case 1: Albemarle stock drops by -5% or more in a week

Case 2: Albemarle stock rises by 5% or more in a week

Is the average return for Albemarle stock higher over the subsequent month after Case 1 or Case 2?

ALB stock fares better after Case 1, with an average return of 2.2% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 1.7% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Albemarle stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Albemarle stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For ALB stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although ALB stock appears to be an exception to this general observation.

ALB’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for ALB stock by changing the inputs in the charts above.