Here’s a name you might not be very familiar with: Sociedad Quimica y Minera de Chile (NYSE:SQM). That’s a mouthful, but SQM stock could have generational wealth-building potential as the company extracts vast quantities of lithium.
This will be essential for electric vehicles and especially their batteries in the coming years. As we’ll see, Sociedad Quimica’s financial growth already indicates a powerful upward trajectory for the company, and for the global lithium industry in general.
Sociedad Quimica is a Chilean mining company, and some traders might not have much experience with international investments. However, you’re encouraged to venture outside of your comfort zone today.
After all, the EV revolution is an unstoppable phenomenon that has no borders. EV battery manufacturers will need a whole lot of lithium – and Sociedad Quimica is more than happy to meet the insatiable demand for the crucial white metal.
What’s Happening with SQM Stock?
Even though many stocks have underperformed in 2022 so far, SQM stock was firmly in the green as of Oct. 21. Perhaps the trading community is finally waking up to the supply-versus-demand imbalance in the lithium market.
Or, maybe some investors are actually venturing outside of U.S.-based commodities businesses to look for outstanding values. Sociedad Quimica certainly fits this description, as the company’s trailing 12-month price-to-earnings (P/E) ratio is quite reasonable at 12.91.
Maybe some income-focused investors are making their move with SQM stock, as well. We can’t really blame them, as Sociedad Quimica pays an extremely generous forward annual dividend yield of 12.52%.
Besides, if you’re looking for a highly active, pure-play lithium miner, you won’t do much better than Sociedad Quimica. If you can believe it, the company expects its 2022 lithium sales volume to reach approximately 145,000 tons.
Growth Isn’t Reflected in SQM Shares, Yet
Suffice it to say that Sociedad Quimica is among the world’s most ambitious lithium producers. Impressively, Sociedad Quimica increased its lithium carbonate and lithium hydroxide production from “approximately 45,000 metric tons per year to 150,000 metric tons in the past three years.”
Has this lithium production ramp-up resulted in firmer financials for Sociedad Quimica? The answer is definitely yes, and there’s data to prove it.
During 2022’s second quarter, Sociedad Quimica’s total revenue jumped 342% year-over-year (YOY) to nearly $2.6 billion. That’s just an appetizer, though. During the same time frame, Sociedad Quimica posted multiple data points indicating outstanding financial growth:
- Gross profit up 598% to $1.3 billion
- Net income up 857% to $859 million
- Adjusted adjusted earnings before depreciation and amortization (EBITDA) up 531% to $1.3 billion
- Earnings per share up 857% to $3.01
And here’s the real kicker: On a YOY basis, Sociedad Quimica’s lithium-segment revenue soared 1,033% to roughly $1.8 billion. Given these startling stats, it’s surprising that SQM stock hasn’t moved more than it actually did during the past 12 months.
What You Can Do Now
It’s possible that Sociedad Quimica’s moon-shot moment will happen in the near future. Sometimes, the market just needs time to fully appreciate the value of an asset.
Of all the world’s lithium producers, Sociedad Quimica is among the most active and financially fruitful. Even stubborn skeptics can’t deny the company’s revenue and profit growth. So, for compelling value, hefty dividend payments and a pure play on the fast-expanding lithium market, feel free to start a position in SQM stock.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place