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Albemarle Shares on the Upswing, Scale New 52-Week High

Shares of Albemarle ALB touched a fresh 52-week high of $78.40 yesterday, before pulling back a bit to end the day at $77.81.

Albemarle, which has a market cap of roughly $8.7 billion, has racked up a healthy year-to-date return of around 39.5%, much higher than the S&P 500’s corresponding return of roughly 2%. Average volume of shares traded over the last three months is roughly 1,422.5K. The company’s long-term projected earnings per share growth is around 17.5%.

Driving Factors

Shares of Albemarle are heading higher following its forecast-topping first-quarter 2016 results, reported on May 10. The company saw its profits skyrocket in the quarter, aided by sizable gains on sale of businesses. The chemical maker logged profit of $228.2 million or $2.02 per share for the quarter, a more than five-fold surge from the year-ago profit of $43.1 million or 40 cents per share.

Adjusted earnings of $1.12 per share topped the Zacks Consensus Estimate of 85 cents. Sales fell roughly 2% year over year to $865.4 million, but surpassed the Zacks Consensus Estimate of $836 million.

Albemarle, in its first-quarter call, said that it remains committed to deliver growth in its core businesses and increase free cash flows on a year over year basis in 2016. The company raised its guidance for 2016 based on strong first-quarter results and expectations for continued growth in most of its businesses.

Adjusted earnings for 2016 are now expected to be between $3.90 and $4.25 per share, up from the earlier view of $3.45 and $3.80 per share. Net sales are expected to be between $3.3 billion and $3.6 billion, also up from the prior view of $3.2 billion and $3.4 billion.

Albemarle is a premier specialty chemicals company with leading positions in attractive end markets globally. The company is selling non-core businesses and assets to boost growth opportunities and focus on its key businesses.

Albemarle, in Feb 2016, wrapped up the sale of its mineral flame retardants and specialty chemicals businesses to Huber Engineered Materials – a division of leading global manufacturer of flame retardant additives, J.M. Huber Corporation.

Also, in Jan 2016, Albemarle completed the divestiture of the tribotecc metal sulfides business to Treibacher Industrie AG, a leading player in the chemistry and metallurgy sectors. The divestment advances Albemarle's strategic plan of focusing on its core bromine, lithium, catalysts and surface treatment businesses.

Albemarle also remains committed to deliver incremental returns to shareholders leveraging healthy cash flows. The company, in Feb 2016, bumped up its quarterly dividend by 5% to 30.5 cents per share. The hike represents the 22nd straight year of dividend increase by the company. Albemarle’s operating cash flows for the first quarter surged nearly four-fold year over year to around $172.7 million.

Albemarle currently holds a Zacks Rank #1 (Strong Buy).

Other Stocks to Consider

Other well-placed companies in the chemical space include Koninklijke DSM N.V. RDSMY, Asahi Kasei Corp. AHKSY and Innospec Inc. IOSP, all sporting a Zacks Rank #1.

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ALBEMARLE CORP (ALB): Free Stock Analysis Report
ASAHI KASEI CP (AHKSY): Free Stock Analysis Report
KONINKLIJKE DSM (RDSMY): Free Stock Analysis Report
INNOSPEC INC (IOSP): Free Stock Analysis Report
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