ALB - Better Buy: Sociedad Quimica y Minera vs. Albemarle
Sociedad Quimica y Minera de Chile (NYSE: SQM) and Albemarle (NYSE: ALB) were hot stocks on Wall Street in 2016 and 2017. In that two-year span, their share prices rose roughly 60% and 120%, respectively, as investors bid up the price of just about anything related to lithium, a key ingredient in batteries. Now, however, due to weak pricing and oversupply concerns, both lithium prices and the shares of these lithium producers have crashed back down to Earth.
The commodity's long-term story is still strong, though, and you might still find one of these two companies to your liking. But which one makes the better investment today?
The first thing to note about Sociedad Quimica (SQM) and Albemarle is that while they are lithium producers, both are diversified businesses. Albemarle also produces bromine and catalysts for the energy industry, which together account for around half of its adjusted EBITDA. SQM's other segments include plant nutrition products, iodine, potassium, and industrial chemicals, which combine to provide a little more than half of its gross profits. The point is that while lithium is important to both, neither is totally reliant on it.