Sociedad Quimica y Minera de Chile

What’s Happening with SQM Stock?

Even though many stocks have underperformed in 2022 so far, SQM stock was firmly in the green as of Oct. 21. Perhaps the trading community is finally waking up to the supply-versus-demand imbalance in the lithium market.

Or, maybe some investors are actually venturing outside of U.S.-based commodities businesses to look for outstanding values. Sociedad Quimica certainly fits this description, as the company’s trailing 12-month price-to-earnings (P/E) ratio is quite reasonable at 12.91.

Maybe some income-focused investors are making their move with SQM stock, as well. We can’t really blame them, as Sociedad Quimica pays an extremely generous forward annual dividend yield of 12.52%.

Besides, if you’re looking for a highly active, pure-play lithium miner, you won’t do much better than Sociedad Quimica. If you can believe it, the company expects its 2022 lithium sales volume to reach approximately 145,000 tons.

Growth Isn’t Reflected in SQM Shares, Yet

Suffice it to say that Sociedad Quimica is among the world’s most ambitious lithium producers. Impressively, Sociedad Quimica increased its lithium carbonate and lithium hydroxide production from “approximately 45,000 metric tons per year to 150,000 metric tons in the past three years.”

Has this lithium production ramp-up resulted in firmer financials for Sociedad Quimica? The answer is definitely yes, and there’s data to prove it.

During 2022’s second quarter, Sociedad Quimica’s total revenue jumped 342% year-over-year (YOY) to nearly $2.6 billion. That’s just an appetizer, though. During the same time frame, Sociedad Quimica posted multiple data points indicating outstanding financial growth:

Gross profit up 598% to $1.3 billion

Net income up 857% to $859 million

Adjusted adjusted earnings before depreciation and amortization (EBITDA) up 531% to $1.3 billion

Earnings per share up 857% to $3.01

And here’s the real kicker: On a YOY basis, Sociedad Quimica’s lithium-segment revenue soared 1,033% to roughly $1.8 billion. Given these startling stats, it’s surprising that SQM stock hasn’t moved more than it actually did during the past 12 months.

What You Can Do Now

It’s possible that Sociedad Quimica’s moon-shot moment will happen in the near future. Sometimes, the market just needs time to fully appreciate the value of an asset.

Of all the world’s lithium producers, Sociedad Quimica is among the most active and financially fruitful. Even stubborn skeptics can’t deny the company’s revenue and profit growth. So, for compelling value, hefty dividend payments and a pure play on the fast-expanding lithium market, feel free to start a position in SQM stock.

On the date of publication, Louis Navellier had a long position in SQM. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

Whether you’re an ESG investor looking at renewable energy or a thematic investor following the global uptick in demand for renewable materials, lithium stocks have likely piqued your attention. There are more than a few options for lithium stocks to buy, which begs the question: which companies are best-positioned to give investors market-beating ROI?

If you’re considering which lithium stocks to buy in 2022, take the time to evaluate each company’s fundamentals, as well as its role in this high-demand market. Are you interested in companies that perform extraction? Midstream refinement organizations? Integrated lithium pure-play companies? It’s worth understanding what’s out there before diving into this market.

Below, you’ll find a list of the five most promising lithium stocks to buy right now, encompassing all aspects of the market. While they all take a different approach to generating profit, they all have one thing in common: lithium.

5. Sociedad Quimica y Minera de Chile (NYSE: SQM)

The world’s largest producer of lithium products is a no-brainer on this list. Not only does the world’s growing demand for lithium products solidify SQM’s spot among lithium stocks to buy right now, its financials are more than enough to justify a case for both short- and long-term investors.

The quarterly earnings growth for Sociedad Quimica y Minera de Chile is through the roof, registering 979.50% as of its latest earnings report. This is due in large part to its quarterly sales growth, which ticked up 282.20%. With an operating margin of 44.50% and sales of $4.35 billion, this company has firmly entrenched itself as one of the best lithium investments out there. Best of all? It’s price-to-earnings growth (PEG) is an attractive 0.54, with reasonable valuation across similar metrics.

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4. Albemarle (NYSE: ALB)

Another of the world’s largest lithium suppliers, Albemarle is an attractive investment in this booming niche. The company’s five-year EPS outlook of 46.14% is attractive given the current economic climate, and it’s backed up by healthy sales growth of 36%. A low debt load and a very healthy operating margin of 26.50% open the company up to long-term stability: something more and more appealing to investors today.

The only real knock against Albemarle is an astronomical P/E of 102.25 and a PEG of 2.22. The company appears overvalued at its current share price, which can make it a tough position to open for those seeking value in the lithium space. Nonetheless, it’s an industry leader with very few direct competitors.

3. Lithium Americas (NYSE: LAC)

Lithium Americas has been on an upward trajectory since 2020 and shows no signs of slowing. The company peaked at nearly $40 per share in early April 2022, but has since retracted to the mid-$20 area, which is actually a good thing for serious investors. At current levels LAC is much more reasonably valued (though still on the high side).

Lithium Americas is currently laying the groundwork to become a big-time player in the lithium space, with operations in both North and South America. Its balance sheet might not look all that impressive today; however, it has an EPS outlook of more than 350% in the year ahead! While that’s an ambitious target for a company that has yet to post profitability, it’s not far off. Investors looking to roll the dice on a long-term lithium play will want to take a second look at LAC.

2. Livent (NYSE: LTHM)

Spun off from FMC (NYSE: FMC) in 2018 to create a lithium pure-play business, Livent is a very attractive player in the space right now. It’s one of the top lithium stocks to buy and one with a long runway ahead of it. The company is already profitable, reporting $54.6 million in income on $472.2 million in sales. Its sales are also on the rise, growing 56.50% over the last quarter. Low debt load makes it an even more attractive long-term play.

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As is the case with other lithium stocks, Livent is wildly overvalued at current levels. It has a P/E of 112.38 and, more alarmingly, a PEG of 112.38. Its P/C is also at 70.04, signaling to investors that they’re paying a significant premium. Nevertheless, a share price below $30 is attractive enough to consider a starter position.

1. Ganfeng Lithium (OTC: GNEN.F)

Many investors are hesitant to invest in Chinese companies due to concerns about transparency and the looming threat of geopolitical tensions. That said, it’s difficult to find a more attractive lithium stock to buy than China’s largest lithium producer: Ganfeng Lithium. The company has done nothing but outperform, and its financials hold up to scrutiny.

In its most recent earnings report, Ganfeng Lithium posted $5.37 billion in revenue, resulting in more than $3.5 billion in net income: a 640% year-over-year increase. This is thanks to a 65% profit margin. The company’s five-year trendline paints a picture of the world’s growing dependence on lithium and this company’s ability to supply it to major buyers like Tesla (NASDAQ: TSLA). It’s one of the top companies in the world and a top lithium stock to buy and hold long-term.

Future Prospects of Best Lithium Stocks to Buy

Demand for raw materials is on the rise across virtually every sector, and lithium is a frontrunner in terms of viable applications and accompanying demand. The future is bright for lithium, and even brighter for the companies capable of supplying it to manufacturers. Take a closer look at any of the five companies above when it comes to investing in lithium for the long-term.

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