Albemarle (ALB) reported stronger-than-expected Q3 earnings and substantially raised full-year guidance after Wednesday’s close. ALB stock rose on the earnings news, extending its hot streak.
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Lithium plays have been on fire amid surging prices for the key ingredient in EV batteries. Livent (LTHM), which reports after Thursday’s close, flew into buy range on Friday en route to a five-session, 21% gain that’s put LTHM stock out of reach.
Automakers are racing to build EV battery factories, raising the risk of a lithium shortage in coming years. The Biden administration wants to boost the tax credit for buying an EV as high as $12,500, which could help speed adoption in the U.S.
Albemarle and Livent are mainly locked into longer-term contracts, so it may take a while for higher prices to flow through to the bottom line. However, ALB stock and LTHM stock are pricing in some of that good news.
Albemarle Earnings
Estimates: Albemarle earnings per share were seen falling 31% from a year ago to 75 cents, according to Zacks Investment Research. Revenue was expected to grow 4% to $775.61 million.
Results: Albemarle earnings per share dipped 4% to $1.05, as revenue grew 11% to $830.6 million.
Outlook: Albemarle raised its outlook for full-year adjusted EPS to a range of $3.85-$4.15 from a prior range of $3.35-$3.70. Ahead of the earnings report, analysts looked for full-year Albemarle earnings of $3.58 per share.
ALB stock rose 3.5% in extended trading. On Wednesday, Albemarle stock rose 0.7% to 261.95, just beyond the chase zone that runs through 256.68. On a weekly chart, ALB stock closed in range from a cup base with a 253.19 buy point.
ALB stock was featured as IBD Stock Of The Day on Oct. 25 and in more depth in The New America on Friday. A daily MarketSmith chart for ALB stock shows a 244.46 buy point from an eight-week cup-with-handle base.
ALB stock broke out from a cup-with-handle base last Thursday and has quickly climbed beyond buy range.
ALB stock is the top holding of Global X Lithium & Battery Tech (LIT), which is part of the elite IBD Leaderboard portfolio. The ETF’s holdings also include a number of Chinese EV battery plays, as well as Tesla (TSLA) and Chinese EV maker BYD Co. (BYDDF).
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Livent Earnings
Livent is expected to turn a profit of 4 cents per share, rebounding from a year-ago loss, as revenue grows 33% to $96.66 million.
LTHM stock rose 0.6% to 30.21 on Wednesday, and now sits 11% above a 27.37 buy point. The latest breakout completed a bullish base-on-base pattern.
Shares rose modestly overnight on Albemarle earnings.
Other Lithium Stocks
On Tuesday, Sociedad Quimica y Minera de Chile (SQM) joined the party, surging 7.7% to clear two entry points. SQM stock rose past a 57.53 early entry, then cleared a 60.84 buy point from a 40-week consolidation. SQM earnings are due Nov. 17.
Other lithium stocks to watch include Lithium Americas (LAC), Piedmont Lithium (PLL) and Standard Lithium (SLI), which are all development-stage companies that have yet to generate revenue.
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