1. Albemarle Corporation (NYSE:ALB)
Upside Potential: 35%
Number of Hedge Funds Holders: 32
Albemarle Corporation develops, manufactures, and markets specialty chemicals. The company operates through three segments: Energy storage, Catalyst and Specialties.
The Energy Storage segment deals with storage of various lithium compounds like lithium carbonate, lithium chloride and lithium hydroxide. The company also provides technical service for handling and use of reactive lithium products.
On the other hand, the Specialties segment deals in bromine-based specialty chemicals, elemental bromine, alkyl, organic bromine, and other bromine fine chemicals. It also manufactures cesium products for chemical and pharmaceutical industries. Lastly, the catalyst segment offers clean fuel technologies.
Albemarle Corporation (NYSE:ALB) recorded sales revenue of $1.4 billion in second quarter of 2024. The sales stayed roughly the same over the two quarters of 2024; however, it fell from $2.4 billion in the prior-year quarter. This decline was primarily due to lower pricing in the Energy Storage sector.
Furthermore, the company registered an EBITDA of $386 million that saw a decline of $880 million from the prior-year quarter. This decline was on the account of lower margins and reduced equity earnings, due to falling prices of lithium. However, the adjusted EBITDA rose by 33% in the second quarter compared to the first quarter fueled by higher sales volumes across all businesses and higher income from Talison JV sales volumes.
Albemarle Corporation (NYSE:ALB) also reported operational cash flows of $363 million in the quarter. This was an increase of $289 million compared to the same quarter of the last year. Improvements in working capital and higher Talison JV drove this improvement in cash position. The company ended the second quarter with $3.5 billion liquidity, including $1.8 billion of cash and cash equivalents and $1.5 billion in the revolving facility.
Albemarle has unveiled its project plan for Kings Mountain Mine, which is one of the few known hard-rock lithium deposits in the U.S. The plan outlines the site footprint, primary features, and mining process details. Following approval and final investment decision, the mine is projected to produce 420,000 tons of lithium-bearing spodumene concentrate every year.
Given the strong financial situation reported along with the major breakthrough in lithium mining, 22 analysts have forecasted an upside of 35% in the share price. Additionally, 32 Hedge funds have invested $484 million in this share as well.
ALB is a specialty chemic stock with high upside potential. But our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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