Please ensure Javascript is enabled for purposes of website accessibility

Why Lithium Stock Albemarle Soared 17.3% in September

By Beth McKenna - Oct 4, 2017 at 8:02AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the world's largest lithium producer jumped last month likely due to these catalysts. Albemarle stock has returned 60.6% so far in 2017.

What happened

Shares of Albemarle (ALB -1.06%), which is the world's biggest producer of lithium and what I consider to be one of the three best lithium stocks for most investors, jumped 17.3% in September, according to data from S&P Global Market Intelligence. For context, the S&P 500 returned 2.1% in the month.

The specialty chemical company's stock has returned a whopping 60.6% so far in 2017, through Oct. 3, crushing the S&P 500's 14.9% return over this period. 

Outdoor sign with an image of a car with an electrical cord attached to it -- concept for an electric car. Sign indicates a charging station.

The growing popularity of electric vehicles is "driving" demand for lithium to make lithium-ion batteries. Image source: Getty Images.

So what

We can surely attribute Albemarle stock's robust performance in September to at least one catalyst, and perhaps more than one. On Sept. 11, news broke that China had begun looking at a ban on the production of petroleum-powered cars. Such a ban by the world's largest auto market would be a boon for electric vehicles (EVs), and, therefore, lithium producers because the metal is needed to make the lithium-ion batteries that power EVs. Albemarle stock jumped nearly 5% on this day alone. 

It seems likely that the stock's performance in September was also at least partially due to a bounce back after the stock seemed to be unduly punished in August after the company announced very solid second-quarter earnings. The stock closed down 6.2% on the first trading day after earnings were released and continued to lose ground for several days. Though Albemarle missed Wall Street analysts' quarterly revenue expectations, it beat on the earnings side. 

Now what

Albemarle stock, along with most lithium stocks, has been red-hot since early last year. So it's very possible that sizable pullbacks could be on the horizon. That said, the long-term picture still looks bright due to the growing popularity of EVs.

Investors, however, need to keep their eyes on the lithium supply side. For now and for the near term, it looks like supply will have a hard time keeping up with growing demand, but that could change down the road.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Albemarle Corporation Stock Quote
Albemarle Corporation
ALB
$198.30 (-1.06%) $-2.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
323%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.