2024-01-22 13:30:00 ET
Summary
- Investors in SQM have experienced a significant slump as the company's stock fell nearly 40% over the past year. However, we could be at the bottom of the cycle.
- Underlying lithium prices have crashed by about 80% over the past year, as the cycle peak in 2022 wasn't sustainable, taking commodities analysts by surprise.
- SQM has agreed with Codelco to extend its lease in the Salar de Atacama through 2060.
- I assess SQM could remain materially undervalued, given its regulatory risks. However, it last traded at a forward EBITDA multiple of just 4.7x, likely priced in.
- With SQM returning to its November 2023 lows as selling pressure intensified, I gleaned a pivotal buying opportunity has emerged for high-conviction investors.
Investors in Sociedad Quimica y Minera de Chile S.A. ( SQM ) have experienced the worst slump over the past two years, as SQM fell nearly 40% on a 1Y total return basis. However, underlying lithium prices have done far worse, as they recorded a plunge of about 80% over the past year, as a supply crunch turned into a supply glut. As a result, leading lithium miners like SQM felt the brunt of the market collapse, hurting late investors who chased SQM at its 2022 highs....
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For further details see:
SQM: A Pivotal Buying Moment Is Knocking At The Front Door