Editor’s note: This column is part of our Best Stocks for 2017 contest. Matt McCall’s pick for the contest is Albemarle Corporation (NYSE:ALB).
I am and always have been a firm believer that stocks are the best asset class in the world right now, but I have to say, picking just one as my favorite for the entire year is tough. However, it’s a challenge I’m up for, so I’m very excited to be joining InvestorPlace Media’s Best Stocks for 2017 contest this year.
A lot of the work I do is focused on industry groups. I like to start with a macro view of the market to determine which sectors can outperform the indices in the near term.
One of the sectors I’m zeroing in on right now is lithium, so my pick for the best stock of the year is a company that finds itself at the forefront of that industry.
ALB Stock’s High Points
Albemarle Corporation (NYSE:ALB) is a global specialty chemicals company that is a leader in lithium, bromine, refining catalysts and applied surface treatments. It’s one of three major global players in the lithium sector, with 2015 net sales in that division of $509 million, well above those of its two closest rivals. The company owns lithium brine operations in Chile and the United States, and also has a stake in a mine in Australia.
Headquartered in Charlotte, N.C., with a history dating back to 1887, Albemarle has 6,900 employees and caters to customers in countless industries across approximately 100 countries.
I also like that the company has a solid earnings track record, besting estimates on the bottom line six of the last seven quarters. In its most recent third-quarter report, ALB stock saw earnings of 91 cents a share, significantly better than expectations of 81 cents a share, and revenue of $654 million. Wall Street had been looking for $653.7 million.
Management also raised full-year guidance, with 2016 earnings expected in the range of $3.45 to $3.55 a share and revenue of $2.6 billion – $2.7 billion.
But as I mentioned, the largest opportunity I see here is in the lithium market, which is expected to boom over the next decade as demand for electric vehicles and hybrids expands. Albemarle is a leader in the industry and is the best way to capture the rising commodity prices as a result of the increased demand.
As you can see above, ALB stock has had a fantastic year so far, climbing more than 60% and hitting an all-time high of $92.24 earlier this month.
The stock is above both the 50- and 200-day moving average, both of which add support on the downside, and I expect its strength to continue well into 2017.
Matthew McCall is founder and president of Penn Financial Group, an investment advisory firm. Matt also is Editor of FUTR Stocks and the ETF Bulletin. Earlier this year, Matt and Hilary Kramer teamed up on Breakout Stocks where Matt serves as the Co-Editor. Most recently, Matt and Hilary joined forces again. This time, they are helping individual investors make money trading ETFs. For more on their latest project, visit www.etfedgesummit.com.
