Should You Buy Albemarle Stock After a 61% Rally in 3 Months

Albemarle Corporation’s ALB shares have popped 60.8% in the past three months, outperforming the Zacks Chemical - Diversified industry’s rise of 22.9% and the S&P 500’s increase of 2.1%. The rally has been driven by the company’s better-than-expected earnings performance, aided by volume growth in the Energy Storage segment and its cost reduction efforts, and a rebound in lithium prices amid rising demand and supply tightness. 

ALB’s peers, Sociedad Quimica y Minera de Chile S.A. SQM and Rio Tinto Group RIO, have gained 37.1% and 37.7%, respectively, over the same period.

ALB’s 3-month Price Performance

Technical indicators show that ALB is currently trading above its 200-day simple moving average (SMA) and 50-day SMA. Following a golden crossover on Sept. 3, 2025, the 50-day SMA is reading higher than the 200-day SMA, indicating a bullish trend.

Albemarle Trades Above 50-Day SMA

Let’s take a look at ALB’s fundamentals to analyze the stock better.

ALB Rides on Project Expansion, Productivity & Higher Prices

Albemarle is well-placed to gain from long-term growth in the battery-grade lithium market. The market for lithium batteries and energy storage remains strong, especially for electric vehicles (EVs), offering significant opportunities for the company to develop innovative products and expand capacity. Lithium demand is expected to grow on the back of significant global EV penetration. ALB expects lithium demand to increase at a compound annual growth rate (CAGR) of 15-30% from 2024 to 2030.

The company is strategically executing its projects aimed at boosting its global lithium conversion capacity. It remains focused on investing in high-return projects to drive productivity. Healthy customer demand, capacity expansion and plant productivity improvements are supporting its volumes. ALB saw higher sales volumes in its Energy Storage unit in the third quarter of 2025 on record production from its integrated conversion facilities. The Salar yield improvement project in Chile has achieved a 50% operating rate. The ramp-up at the Meishan lithium conversion facility in China is also progressing ahead of schedule.

Albemarle is also taking aggressive cost-saving and productivity actions in the wake of tumbling lithium prices. The company expects to deliver roughly $450 million in cost and productivity improvements for full-year 2025, having surpassed its initial target of $300-$400 million. ALB is taking actions to maintain its competitive position, including the initiation of a comprehensive review of cost and operating structure, optimization of the conversion network and reduction of capital expenditure. It has lowered the full-year 2025 capital expenditures outlook to around $600 million.

Higher lithium prices driven by strong demand from EVs and energy storage systems, along with supply disruptions due to recent supply reductions in China, should also aid ALB’s performance. Lithium prices have rebounded lately from trough levels, supported by tightening supply and strong demand in China and globally.

Strong Financial Health Supports ALB’s Capital Allocation

Albemarle remains committed to driving shareholder value by leveraging healthy cash flows and strong liquidity. At the end of the third quarter of 2025, ALB had liquidity of around $3.5 billion, including cash and cash equivalents of around $1.9 billion. Its operating cash flow was around $893.8 million for the first nine months of 2025, up 29% from the prior-year period. ALB expects to generate free cash flow of $300-$400 million for full-year 2025, driven by strong cash conversion, lower capital spending and productivity measures. 

The company remains focused on maintaining its dividend payout. It has raised its quarterly dividend for the 30th straight year. ALB offers a dividend yield of 1% at the current stock price. Backed by healthy cash flows and sound financial health, the company's dividend is perceived to be safe and reliable.

ALB’s Estimates Reflect Positive Sentiment

The Zacks Consensus Estimate for 2025 for ALB has been revised upward over the past 60 days. The consensus estimate for 2026 has been going up over the same time frame.
 
The Zacks Consensus Estimate for 2025 earnings is currently pegged at a loss of 70 cents, suggesting a year-over-year increase of 70%. Earnings are expected to register a rise of roughly 720.6% in 2026.

A Look at ALB’s Valuation

ALB is currently trading at a forward price-to-sales ratio of 3.53, well above the industry. It is trading at a premium to Sociedad Quimica and Rio Tinto. Albemarle currently has a Value Score of D, while both Rio Tinto and Sociedad Quimica have a Value Score of B.

ALB’s P/S F12M Vs. Industry, SQM and RIO

Conclusion: Buy ALB Shares

Albemarle is benefiting from higher lithium volumes on project ramp-ups and actions to boost global lithium conversion capacity and productivity. ALB is well-placed to capitalize on the significant growth opportunity in the battery-grade lithium market underpinned by the global shift toward EVs. Improving lithium prices amid surging demand and supply constraints also augur well. 

Upward-trending earnings estimates and a solid growth outlook further enhance ALB’s appeal. While ALB trades at a premium, the valuation is well-supported by its strong fundamentals and earnings potential. We advise investors to bet on this Zacks Rank #1 (Strong Buy) stock now, as it has solid growth prospects. 

You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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