The Large-Cap Stock Outperforming the Market Over the Past 12 Months

ALB remains 34% in the green over the past year

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Albemarle Corporation (NYSE:ALB) is a global specialty chemicals company with leading positions in lithium, bromine, and refining catalysts. ALB offers a dividend yield of 0.7% with a forward dividend of $1.58. Albemarle stock has lost 3.7% this year, with a recent ceiling in place at the 200-day moving average. However, the 320-day moving average has kept most of a recent pullback in check, and year-over-year, the shares have added 34%.

An unwinding of pessimism among options traders could put additional wind at the equity's back. At the International Securities Exchange (ISE), Cboe Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) 1.43 puts have been picked up for every call during the past 10 weeks. This ratio sits higher than 82% of readings from the past year, suggesting a healthier-than-usual appetite for bearish bets of late. 

A round of upgrades could also be on the horizon for ALB. Of the 14 in coverage, six still call the stock a "hold" or worse. 

Albemarle stock’s valuation remains high at a price-earnings ratio of 94.28 and a price-sales ratio of 7.02. ALB also currently owes $2.64 billion in total debt and holds $463.32 million in cash on its balance sheet, limiting its growth potential. Moreover, the EV-adjacent business has experienced a consistent decline in annual net income over the past few years, reporting an 82.2% decrease between fiscal 2018 and fiscal 2021.

However, estimates have ALB ending fiscal 2022 with a 79.2% increase in revenues and a 234.9% increase in earnings, placing its forward price-earnings ratio at a far more attractive value of 17.24. In addition, Albemarle is expected to grow its revenues by 14.2% and its earnings by 12.7% for fiscal 2023. Still, the lithium company’s high growth expectations and relatively weak fundamentals could set it up for failure in the coming years, making Albemarle stock an unideal investment at its rich valuation.


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