Should You Buy Albemarle Stock After a 61% Rally in 3 Months

Core Insights - Albemarle Corporation's shares have surged 60.8% in the past three months, significantly outperforming the Zacks Chemical - Diversified industry's increase of 22.9% and the S&P 500's rise of 2.1% [1][7] - The company's growth has been driven by better-than-expected earnings, volume growth in the Energy Storage segment, cost reduction efforts, and a rebound in lithium prices due to rising demand and supply constraints [1][7][10] Performance Comparison - Albemarle's peers, Sociedad Quimica y Minera de Chile S.A. and Rio Tinto Group, have seen their shares increase by 37.1% and 37.7%, respectively, over the same period [2] Technical Indicators - Albemarle is currently trading above its 200-day and 50-day simple moving averages, indicating a bullish trend following a golden crossover on September 3, 2025 [5][6] Market Position and Growth Potential - The company is well-positioned to benefit from long-term growth in the battery-grade lithium market, with lithium demand expected to grow at a compound annual growth rate (CAGR) of 15-30% from 2024 to 2030 [10] - Albemarle is strategically executing projects to boost its global lithium conversion capacity, supported by healthy customer demand and productivity improvements [11] Cost Management and Financial Health - The company is implementing aggressive cost-saving measures, expecting to achieve approximately $450 million in cost and productivity improvements for full-year 2025, surpassing its initial target of $300-$400 million [12] - Albemarle's liquidity at the end of Q3 2025 was around $3.5 billion, with cash and cash equivalents of approximately $1.9 billion, and operating cash flow of about $893.8 million for the first nine months of 2025, reflecting a 29% increase year-over-year [14][15] Earnings Estimates and Valuation - The Zacks Consensus Estimate for 2025 earnings has been revised upward, with expectations of a loss of 70 cents, indicating a year-over-year increase of 70%, and a projected rise of roughly 720.6% in 2026 [16] - Albemarle is currently trading at a forward price-to-sales ratio of 3.53, which is above the industry average and at a premium compared to its peers [17] Conclusion - Albemarle is capitalizing on higher lithium volumes and productivity improvements, with a strong outlook in the battery-grade lithium market driven by the global shift towards electric vehicles [19][21] - The upward trend in earnings estimates and solid growth prospects enhance the company's appeal, despite its premium valuation [21]