Brenda Vingiello, CIO, Sand Hill Global Advisors Albemarle Corp ALB-N PARTIAL BUY Aug 04, 2023

They'll move 1.9 million metric tons (of lithium) this year, and 3.7 by 2030. It bounced off $185 and is a great entry point here.

There's lithium everywhere. It's going to be an opportunity for EVs. But if you look at the price of a giant like ALB, the shares have come down, and that's just gravity taking hold of high valuations. If you need to sell, sell. Restructuring restricted share trading earlier this week.

Lithium exposure good for investors. Speculative investment given nature of commodities. Don't get over exposed. Balance in portfolio. 

Lithium prices have plunged. She will add to her position but not until lithium stabilizes. Commodity weakness is already built into the lithium stocks.

The energy transition from fossil to renewable takes time. That's the reality. There's plenty of lithium in the world, but how quickly can we get it to market? The market was surprised by how quickly brine mining in Chile. Also, people aren't buying EV's as quickly as the market expected. Lithium is close to the bottom, so the risk/reward looks good.

Not bullish. Lithium sector tough. 

Very tough business to predict. Collapse of share price very hard to understand. Capital intensive industry with risky bets. Lithium excitement got ahead of the market. However, in fact, there is lots of Lithium in North America. Unless company is low cost producer, not a good investment. 

The EVs market isn't ready yet; there aren't enough charging stations.

Lithium prices are -55% the past year. This is about China, which has the worst GDP throughput to earnings; GDP doesn't enhance earnings. However, commodity prices do. China amounts to 60% of all EV sales. If economic stimulus continues there, it will put a floor under lithium prices.

Albemarle delivered a better-than-expected 1Q -- with adjusted Ebitda of $267 million, roughly 31% ahead of consensus -- and maintained its outlook considerations, suggesting 2025 adjusted Ebitda of $800 million-$1 billion under its $9/kg LCE price scenario. Though fundamental catalysts for higher lithium prices remain limited, we think Albemarle's strong progress on self-help initiatives, including conversion-network optimization, cost cuts and cash-flow prioritization, will ultimately leave the company more competitively positioned through the cycle. Management updated its long-term lithium forecasts and expects demand to hit roughly 3 million metric tons LCE by 2030. ALB continues to have line of sight to breakeven free cash flow in 2025. Direct tariff impacts are projected to be minimal. The company has net $4.6B in debt and preferred shares, against $1.1B in operating cash flow, so is fairly leveraged. While we would consider it OK, we do not think it is the time to buy this just yet. 
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