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Sociedad Quimica (SQM) Stock Up 73% in 6 Months: Here's Why

Zacks Equity Research
·4 min read

Sociedad Quimica y Minera de Chile S.A.’s SQM shares have popped 72.6% over the past six months. The company has outperformed its industry’s rise of 18.6% over the same time frame. It has also topped the S&P 500’s roughly 20% decline over the same period.

Let’s take a look into the factors that are driving this a Zacks Rank #1 (Strong Buy) stock.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

What’s Favoring SQM?

Sociedad Quimica is benefiting from being the low-cost producer of potassium chloride, potassium sulfate and potassium nitrate. Higher realized prices and strong demand are driving its results as witnessed in the first quarter of 2022.

Revenues from the company’s Lithium and Derivatives segment surged more than tenfold year over year in the first quarter, driven by strong lithium sales volumes and prices. The Specialty Plant Nutrients segment also saw a 42% increase in sales in the quarter on the back of higher prices.

Sociedad Quimica is gaining from favorable trends in the lithium market underpinned by strong electric vehicle sales. The expansion of lithium operations is also supporting the company’s lithium sales volumes. Strong demand and limited supply are also boosting lithium prices. The company envisions global lithium market to growth at least 30% in 2022. It expects sales volumes to exceed 140,000 metric tons this year.

Iodine volumes are also being supported by growing demand following the post-pandemic recovery. The company also expects iodine prices to continue to rise in the coming quarters. Global potassium prices are also have been driven by the shortage of potassium-based fertilizers. This is driving prices in the company’s potassium business lines.

Earnings estimates for Sociedad Quimica have also been going up over the past two months, reflecting analysts’ optimism. The Zacks Consensus Estimate for Sociedad Quimica for 2022 has increased around 55%. The consensus estimate for second-quarter 2022 has also been revised roughly 95% upward over the same time frame.

The Zacks Consensus Estimate for earnings for 2022 for Sociedad Quimica is currently pegged at $9.49, reflecting an expected year-over-year growth of 362.9%. Earnings are also expected to register a 787.1% growth in second-quarter 2022.

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Sociedad Quimica y Minera S.A. Price and Consensus

 

Sociedad Quimica y Minera S.A. Price and Consensus
Sociedad Quimica y Minera S.A. Price and Consensus

Sociedad Quimica y Minera S.A. price-consensus-chart | Sociedad Quimica y Minera S.A. Quote

 

Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space include Albemarle Corporation ALB, Cabot Corporation CBT and Allegheny Technologies Inc. ATI.

Albemarle has a projected earnings growth rate of 231.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 112.4% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has rallied roughly 22% in a year. The company flaunts a Zacks Rank #1.

Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 6% upward in the past 60 days.

Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 13% over a year.

Allegheny has a projected earnings growth rate of 1,076.9% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 40.4% upward in the past 60 days.

Allegheny’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI has gained around 10% in a year and currently sports a Zacks Rank #1.


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Allegheny Technologies Incorporated (ATI) : Free Stock Analysis Report
 
Albemarle Corporation (ALB) : Free Stock Analysis Report
 
Sociedad Quimica y Minera S.A. (SQM) : Free Stock Analysis Report
 
Cabot Corporation (CBT) : Free Stock Analysis Report
 
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Zacks Investment Research