Albemarle: New Dividend Aristocrat With ~20% Upside And Attractive Long-Term Growth Story

Today's article will discuss Albemarle (ALB), a long-term investment of mine that I have been holding since mid-2015. As the stock has come under pressure in 2018, I wanted to lay out and explain some of the risks/fears as well as my investment thesis for this position. The key elements of my investment thesis are:
Albemarle is a clear market leader with best-in-class assets. Its deep know-how and global asset base differentiate it vs. competitors and positions it well to execute its growth strategy. The Company benefits from strong secular tailwinds, particularly in its Lithium segment. These tailwinds provide Albemarle with considerable runway for growth over the next decade (and beyond). Albemarle operates in markets where the barriers to entry are immense due to the significant know-how required, high capital intensity, Albemarle's vertical integration driving superior cost competitiveness, and the deep entrenchment of existing suppliers in their customers' supply chain. Driven by long-term contracts with largely locked-in prices, Albemarle benefits from significant revenue visibility and stability. Albemarle is a strong dividend grower, recent addition to the Dividend Aristocrats, that is currently trading at a dividend yield above its 10-year historical average. Further, I developed a multi-case DCF to quantify the various scenarios (both to the up- and downside) for Albemarle in the coming 5 years which reinforced my view that the business is currently once again trading in... Read more