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Sociedad Quimica (SQM) Shares Rally 108% YTD: What's Driving It?

Sociedad Quimica y Minera de Chile S.A.’s SQM shares have shot up 107.5% so far this year, outperforming the industry’s rise of 31.2%. The company has also topped the S&P 500’s 19.1% decline over the same period.

Let’s dive into the factors behind this Zacks Rank #2 (Buy) stock’s price appreciation.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

What’s Driving the Stock?

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 lithium demand to grow at least 35% in 2022. It expects sales volumes to reach at least 145,000 metric tons this year. It expects lithium sales volumes to continue to rise in the upcoming quarters.

Iodine volumes are also being supported by growing demand following the post-pandemic recovery. In Iodine and Derivatives, the company expects significantly higher average prices on a year-over-year basis this year.

Higher realized prices and strong demand are driving the company’s results as witnessed in the second quarter of 2022. Revenues from the company’s Lithium and Derivatives segment surged more than elevenfold year over year in the quarter, driven by strong lithium sales volumes and considerably higher prices. The Specialty Plant Nutrients segment also saw a 52% increase in sales in the quarter on the back of higher prices.

Earnings estimates for Sociedad Quimica have also been going up over the past two months, reflecting analysts’ optimism. The Zacks Consensus Estimate for 2022 has increased around 20.7%. The consensus estimate for 2023 has also been revised roughly 31% upward over the same time frame.

The Zacks Consensus Estimate for earnings for 2022 for Sociedad Quimica is currently pegged at $12.93, reflecting an expected year-over-year growth of 530.7%.

 

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, Univar Solutions Inc. UNVR and The Chemours Company CC.

Albemarle, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 425.3% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 63.7% 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 last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 29% in a year.

Univar, currently carrying a Zacks Rank #2, has an expected earnings growth rate of 24.2% for the current year. The consensus estimate for UNVR's earnings for the current year has been revised 5.9% upward in the past 60 days.

Univar’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 27.6%. UNVR has gained around 4% over a year.

Chemours has a projected earnings growth rate of 40% for the current year. The Zacks Consensus Estimate for CC's current-year earnings has been revised 6.9% upward in the past 60 days.

Chemours’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 28.3%, on average. CC has gained around 13% in a year and currently carries a Zacks Rank #2.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Albemarle Corporation (ALB) : Free Stock Analysis Report
 
Sociedad Quimica y Minera S.A. (SQM) : Free Stock Analysis Report
 
The Chemours Company (CC) : Free Stock Analysis Report
 
Univar Solutions Inc. (UNVR) : Free Stock Analysis Report
 
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