Though the canine days of summer time took a chew out of Albemarle (ALB 4.91%) within the first week of August — with shares dropping about 2.6% — the lithium inventory is biting again this week. Because of optimistic commentary from Wall Avenue and momentum constructing with the local weather invoice, Albemarle’s inventory is on monitor to recuperate the loss it suffered final week and certain even greater.
As of 12:36 p.m. ET in the present day, shares of Albemarle are up 17% for the reason that market’s shut final Friday.
Shares started the week on an auspicious notice because of Deutsche Financial institution analyst David Begleiter elevating the value goal to $270 from $255 on Monday morning. In line with The Fly, Begleiter predicated the value goal hike on the “spectacular” second-quarter 2022 earnings outcomes the corporate reported on Aug. 3. The analyst’s greater worth goal doubtless charged up traders’ enthusiasm because it advised notably extra upside to the inventory than the $196 worth goal that Credit score Suisse had offered the day after Albermarle reported earnings.
In addition to analysts’ opinions, the most important catalyst serving to to catapult shares greater this week is the rising confidence that the Inflation Discount Act will make it to President Joe Biden’s desk. With $369 billion in funding to enhance the nation’s power safety and tackle local weather change, many pundits imagine the laws shall be a boon for renewable energy-oriented shares like Albemarle, whose manufacturing of lithium is essential for batteries utilized in electrical autos and power storage — two functions addressed particularly within the Inflation Discount Act.
Buyers are proper to imagine that the Inflation Discount Act will vastly profit Albemarle, however potential traders ought to acknowledge that there is a variety of development baked into the inventory worth at this level. Shares are buying and selling at 123 instances trailing earnings, a steep premium to their five-year common P/E of 56. Fortuitously for traders, there are different methods to acquire publicity to lithium.