The stock price of Albemarle, a chemicals company that is also one of the world’s largest producers of lithium, a key raw material for electric vehicle batteries, has rallied by 26% over the last week (five trading days) and also remains up by about 15% over the past month. This compares to the S&P 500 which remains down by about 8% over the last month. The recent rally follows a stronger than expected set of first-quarter results and the company’s move to significantly raise full-year guidance, amid surging prices and demand for lithium from the electric vehicle industry. Albemarle now expects full-year earnings of between $9.25 and $12.25 per share, up from $5.65 to $6.65 per share, with revenue expected to stand at between $5.2 billion and $5.6 billion, versus a consensus estimate of just about $4.4 billion. The company is well poised to take advantage of rising demand and prices in the long run, as it plans to expand its lithium capacity by over 70% in 2022. While Lithium is usually supplied on a contract basis, the rising spot prices are likely to be reflected in contracts that the company signs in the coming quarters. Overall, Albemarle expects its average realized lithium price to roughly double this year.
However, now that ALB stock has seen a rise of about 15% over the last month, will it continue its upward trajectory in the near term, or is a decline imminent? Going by historical performance, there is a roughly equal chance of a rise or decline in ALB stock over the next month. Out of 214 instances in the last ten years that ALB stock saw a twenty-one-day rise of 15% or more, 114 of them resulted in ALB stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 114 out of 214, or about 53% chance of a rise in ALB stock over the coming month, implying a neutral near-term outlook for the stock. See our analysis on Albemarle Stock Chance of A Rise for more details.
While ALB stock has seen big gains recently, several peers in its sector look like a better bet than Albemarle. Check out how Albemarle Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
Calculation of ’Event Probability’ and ’Chance of Rise’ using last ten years data
- After moving 26% or more over five days, the stock rose in the next five days on 0% of the occasions.
- After moving 21% or more over ten days, the stock rose in the next ten days on 43% of the occasions
- After moving 15% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 53% of the occasions.
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This pattern suggests that ALB stock is unlikely to see major gains in the near term.
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