Better Buy: Sociedad Quimica y Minera vs. Albemarle
Lithium's long-term future is closely tied to the electric vehicle market. On the surface, that sounds like a good thing, as electric cars are increasingly popular. However, there's currently too much lithium available, creating a supply glut that's left the price of this key battery metal in the doldrums, which explains why Albemarle (NYSE: ALB) and Sociedad Quimica y Minera (NYSE: SQM) are off their late-2017 highs by roughly 45% and 55%, respectively. Both are likely to make it through this rough patch, but one is better positioned to deal with weak markets than the other.
Both Albemarle and Sociedad Quimica y Minera (SQM from here on out) have diversified businesses. Albemarle's lithium business accounts for around 42% of adjusted EBITDA, with the rest coming from its bromine and catalyst divisions. SQM's lithium operation makes up about 43% of its gross profit, with the rest derived from its plant nutrition, iodine, potassium, and industrial chemicals segments. Although both are looking to lithium for growth, they each have diversified operations that help offset the current downturn in lithium.
Image source: Getty Images
Source Fool.com
