Top Picks 2019: Albemarle Corp. (ALB)

01/23/2019 5:00 am EST

Focus: INDUSTRIALS

William Selesky

Senior Analyst: Basic Materials, Argus Research Corporation

Albemarle Corp. (ALB) develops and markets engineered specialty chemicals worldwide. The company focuses on the production of lithium compounds for use in lithium batteries, notes analyst Bill Selesky with Argus Research, a leading independent Wall Street Research firm.

Fiscal 2017 revenue totaled $3.07 billion. The current environment is extremely positive, based on strong global demand for lithium-ion batteries used in consumer electronics and automobiles. Lithium demand continues to exceed expectations and is expected to remain strong for the foreseeable future.

 Lithium producers are seeking to acquire additional mines in anticipation of increasing demand. Pricing remains strong based on solid demand trends and weak capacity growth. On size and scale, ALB operates 31 facilities worldwide. Some 80% of projected 2021 demand has already been secured by customer contracts.

Albemarle’s long-term goal is to ramp up lithium production by expanding existing mines and pursuing joint ventures and acquisitions. This should lead to substantially higher-than-average profit growth.

Albemarle focuses on shareholder returns through both dividend increases and stock buybacks. The company raised its dividend by 5% in February 2018 and has increased its dividend for 24 straight years.

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