2. Albemarle Corporation (NYSE:ALB)
Market Capitalization as of September 5: $9.038 billion
Number of Hedge Fund Holders: 32
Albemarle Corporation (NYSE:ALB), a key player in the specialty chemicals sector, is making significant strides in the lithium market, a critical component for the EV industry and energy storage solutions. The company is among our best lithium stocks to buy right now.
As one of the largest global producers of lithium compounds, the company has extensive operations that span across Western Australia, North America, and South America. The company is focused on increasing its production of lithium hydroxide and lithium carbonate, essential for manufacturing lithium-ion batteries.
By 2025, it plans to double its lithium carbonate production capacity from 5,000 to 10,000 tons per year, which is a sign of its commitment to meeting the growing demand in the battery market.
A key development for the company is the Kings Mountain lithium-spodumene mine in North Carolina. This mine is set to become a significant source of lithium-bearing spodumene concentrate, with an expected output of around 420,000 tons annually. This project is vital not only for establishing a domestic supply of lithium in the U.S., but also for supporting sustainable transportation and defense applications, further strengthening the company’s role in the lithium supply chain.
In the second quarter, 32 hedge funds had stakes in Albemarle (NYSE:ALB), with total positions worth $485 million. With 2 million shares worth $91.3 million, D E Shaw is the top investor in the company as of Q2.
The company’s partnerships with major automotive manufacturers such as Ford and BMW highlight its integral role in the EV industry. The company has committed to supplying over 100,000 metric tons of battery-grade lithium hydroxide to Ford for approximately 3 million future EV batteries over the next five years.
Similarly, its long-term agreement with BMW Group will provide battery-grade lithium hydroxide for BMW’s electric vehicles, which is evidence of the company’s integral position in the global EV market.
Although the company has faced a decline in profitability due to lower lithium prices and a slowdown in EV demand, Albemarle (NYSE:ALB) has managed to generate a positive operating cash flow of around $461 million in the first half of 2024. The demand for EVs and utility-scale energy storage is expected to remain strong, with projections indicating a 29% annual increase in U.S. lithium demand through 2030, as per Fastmarkets data.
Despite the current downturn in lithium prices, the company’s established presence and long-term expertise in the industry suggest that the company is well-positioned to navigate these fluctuations. We talked about how lithium demand can surge in the future in our article about, 10 Best Battery Stocks To Buy Now According to Short Sellers. Here is the excerpt:
“According to BP’s Energy Outlook 2024, the transition to a low-carbon energy system will require a substantial increase in the use of critical minerals, such as copper, lithium, and nickel, essential for supporting the infrastructure and assets needed for this transition… Lithium demand could grow 8 to 14 times by 2050, mainly driven by its use in EV batteries, which will account for about 80% of total lithium demand by 2050.”
Management has maintained its forecast for lithium prices to range between $12 and $15 per kilogram this year, which indicates a steady outlook amidst market volatility.
