Is It Time To Consider Buying Albemarle Corporation (NYSE:ALB)?

Today we're going to take a look at the well-established Albemarle Corporation (NYSE:ALB). The company's stock received a lot of attention from a substantial price increase on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Let’s examine Albemarle’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Albemarle

Is Albemarle still cheap?

Albemarle appears to be overvalued by 38% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$235 on the market compared to my intrinsic value of $170.56. This means that the opportunity to buy Albemarle at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Albemarle’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Albemarle look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Albemarle's earnings over the next few years are expected to increase by 46%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? ALB’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe ALB should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on ALB for some time, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for ALB, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you want to dive deeper into Albemarle, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 3 warning signs with Albemarle, and understanding them should be part of your investment process.

If you are no longer interested in Albemarle, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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