We came across a
bullish thesis on Sociedad Química y Minera de Chile S.A. on ARX Global’s Substack. In this article, we will summarize the bulls’ thesis on SQM. Sociedad Química y Minera de Chile S.A.'s share was trading at $35.80 as of August 1
st. SQM’s trailing and forward P/E were 16.97 and 20.45 respectively according to Yahoo Finance.
A laboratory technician pouring a specialty blend of industrial chemicals into a beaker.
Sociedad Química y Minera de Chile (SQM), one of the world’s largest lithium producers, is strategically positioned to benefit from structural demand growth driven by electric vehicles (EVs), energy storage systems (ESS), and the energy transition. SQM operates unique low-cost assets, including the lithium-rich Salar de Atacama and the nitrate- and iodine-rich El Norte Grande, enabling strong margins across lithium, specialty plant nutrients (SPN), and iodine.
Lithium remains the core driver, accounting for 43% of 2024 profits, supported by global consumption growth from under 500kt in 2022 to over 1,000kt in 2024, with projections reaching 3Mt by 2030. Although lithium prices collapsed nearly 90% from the $80k/t peak during the 2021–2022 frenzy to $8k/t currently due to oversupply, this level is below the marginal cost for most producers and unsustainable.
Prices must normalize to incentivize greenfield projects required to meet future demand, with new supply needing $15k–$25k/t to be viable. SQM’s ability to withstand lower prices is enhanced by diversification; SPN and iodine, which together contribute over 50% of profits, offer steady cash flow and downside protection. Iodine prices remain near record highs due to tight supply, while SPN profitability is stabilizing post-war volatility. Long-term lithium demand is underpinned by EV adoption, improving battery technology, and rising ESS needs, with AI-driven power requirements adding further tailwinds.
While near-term risks include slower EV demand in China and potential efficiency gains from direct lithium extraction (DLE), these are unlikely to alter the structural growth trajectory. With a recovery in lithium prices likely and SQM trading below intrinsic value, the stock offers an attractive entry point with meaningful upside potential.
Previously, we covered a
bullish thesis on Eastman Chemical Company (EMN) by Necessary-Damage5658 in November 2024, which highlighted the company’s attractive valuation with trailing and forward P/E multiples of 13.55 and 11.32, respectively. The company’s stock price has depreciated by approximately 41% since our coverage. This is because the thesis didn’t play out amid broader market headwinds. The thesis still stands as structural tailwinds support long-term growth. ARX Global shares a similar view but emphasizes export control-driven advantages and compliance-led market share gains.
Sociedad Química y Minera de Chile S.A. is not on our list of the
30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held SQM at the end of the first quarter which was 10 in the previous quarter. While we acknowledge the potential of SQM as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the
best short-term AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. 
