Shares of Albemarle (ALB 3.59%) are flying high this week and were up 17.8% through 10:30 a.m. ET Friday, according to data provided by S&P Global Market Intelligence.
Albemarle already released its fourth-quarter numbers in mid-February. But given that it’s a commodity stock, Albemarle’s share prices are typically driven more by lithium prices than the company’s operational numbers. Right now, nearly every major player in the industry expects the lithium market to recover, and that could hugely favor Albemarle stock going forward.
Lithium prices may have bottomed out
After plunging 80% in 2023, lithium carbonate prices are bottoming out and headed higher this week. So far this year, they’re up 5%, according to data from Trading Economics.
Just yesterday, Ricardo Ramos, CEO of the world’s second-largest lithium producer Sociedad Quimica y Minera de Chile said it expects lithium prices to remain stable this year even as sales volumes continue to grow, driven by strong demand for lithium from key markets like electric vehicles. SQM sees demand for lithium booming in the coming years. Some days ago, Australia’s largest lithium pure play, Pilbara, also said that it is seeing buyer interest in lithium picking up again.
Should you buy Albemarle stock before it’s too late?
With multiple global players in the industry announcing production cuts in recent weeks, investors in lithium stocks are turning hopeful. Albemarle is a rock-solid company, and its management is now cutting costs and capital spending to drive cash flows higher even in a market downturn.
Albemarle stock makes for a solid buy, but for the long term. Just don’t expect the stock to recover dramatically in the short term unless lithium prices do so too, which looks highly unlikely for now.
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
