Is Now The Time To Look At Buying Albemarle Corporation (NYSE:ALB)?

Albemarle Corporation (NYSE:ALB) saw significant share price movement during recent months on the NYSE, rising to highs of US$201 and falling to the lows of US$113. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Albemarle's current trading price of US$113 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Albemarle’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Albemarle

Is Albemarle Still Cheap?

Great news for investors – Albemarle is still trading at a fairly cheap price according to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Albemarle’s ratio of 4x is below its peer average of 19.73x, which indicates the stock is trading at a lower price compared to the Chemicals industry. Although, there may be another chance to buy again in the future. This is because Albemarle’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What does the future of Albemarle look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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. However, with a negative profit growth of -6.3% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Albemarle. This certainty tips the risk-return scale towards higher risk.

What This Means For You

Are you a shareholder? Although ALB is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. I recommend you think about whether you want to increase your portfolio exposure to ALB, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on ALB for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

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 1 warning sign with Albemarle, and understanding this 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.

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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.