SQM - 2 Lithium Stocks for 2020
Sociedad Quimica y Minera de Chile (NYSE: SQM) and Albemarle (NYSE: ALB) are two of the largest lithium producers in the world. Both companies harvest valuable lithium from the rich salt flats in Chile to be used for batteries in electric vehicles (EVs), conventional batteries, and some industrial products like greases, ceramic frits, and glasses. For investors who believe in the long-term value of lithium, though, which company is the better buy?
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Sociedad Quimica y Minera de Chile, commonly known as SQM, is a Chilean-based chemical company that gets 43% of its gross profit from lithium, 24% from specialty plants and nutrition, 22% from iodine and derivatives, 8% from potassium, and 3% from industrial chemicals, according to the company's November corporate presentation. Although diversified, SQM has amped up its lithium investments in recent years, starting in 2016 when lithium emerged to dominate SQM's asset portfolio, a move that bolstered the stock over 50% in just one year. Now, SQM finds itself in a difficult situation, relying on the volatile spot-price markets to gauge lithium demand.