Lithium Is on the Rise Again. Does That Make Albemarle a Buy?

Shares of Albemarle (NYSE: ALB) are level truthful acold this year, acknowledgment to an oversupply of lithium and a flattened request for electrical vehicles (EVs) successful the United States.

However, the semipermanent request for this captious metallic is projected to summation 353% by the extremity of the decade, according to a study by the United Nations Conference connected Trade and Development.

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Albemarle, the largest lithium miner successful the satellite successful presumption of production, is successful a bully presumption to payment from that trend.

The terms of lithium is bouncing backmost

After lithium prices collapsed from their 2022 peaks, the marketplace yet recovered its level successful precocious 2024 and has staged a resilient year-to-date rebound. Chinese spot prices person climbed backmost into the $23 per kilogram (kg) range, up from their $10 kg debased successful the autumn of 2024, acknowledgment to a restocking rhythm by artillery manufacturers.

While EV request is steady, a caller catalyst has emerged: utility-scale artillery vigor retention systems (BESS). Driven by renewable vigor mandates and surging powerfulness demands from artificial quality (AI) information centers, BESS output is projected to leap astir 35% twelvemonth implicit year.

Because large producers curtailed enlargement plans during the downturn, analysts task a 4% planetary lithium proviso shortage for 2026, which should enactment arsenic a almighty tailwind for realized pricing.

Radical outgo subject and blowout net

Albemarle has pivoted from a axenic maturation mindset to a stricter absorption connected operational efficiency. It slashed superior expenditures by 46% twelvemonth implicit twelvemonth successful the archetypal quarter, idled high-cost capacity, including its Kemerton Train 1 installation successful Western Australia successful February, and divested its Ketjen catalyst part successful March, to go a lean, pure-play vigor modulation company.

The strategy is already paying off. In the archetypal quarter, Albemarle reported income of $1.4 billion, up 33% twelvemonth implicit year, driven chiefly by higher pricing and measurement successful vigor storage. And adjusted net earlier interest, taxes, depreciation, and amortization (EBITDA) totaled $664 million, up 148% from the aforesaid play a twelvemonth ago.

Even with disciplined spending, Albemarle remains connected way to present a 15% volumetric compound yearly maturation complaint (CAGR) successful Energy Storage done 2027 by focusing strictly connected high-return, tier-one assets specified arsenic its Greenbushes excavation successful Australia and the Salar de Atacama excavation successful Chile.