Is Albemarle a Buy?
It was just a few years ago that Wall Street was enamored with any company tied to industrial metal lithium, which gets used in batteries. Then, somewhat predictably, high lithium prices led to oversupply and investors soured on anything related to lithium. The stock of Albemarle (NYSE: ALB), one of the largest lithium producers in the world, rode that emotional roller coaster up and right back down. More recently, after issuing a warning ahead of third-quarter earnings, the stock fell a painful 10% in a day. Is it time to get out, or is there still a reason to buy Albemarle stock?
The problems Albemarle faced in the third quarter were varied. For example, sales volume was lower because of disruptions caused by Typhoon Tapah, reducing EBITDA by around $15 million. That's out of the company's control, and management expects to make at least part of that up in the fourth quarter. In addition, the company had to deal with some operational issues in Chile that trimmed EBITDA by around $10 million. Making lithium is complex, so this isn't an issue to get too worried about, and management is working to improve reliability. Moreover, the company's longer-term track record earns it the benefit of the doubt here.
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Source Fool.com
