Short-Term Hiccups Are No Reason To Sell A Growth Stock
Last quarter, I discussed the shift in thinking needed when a value stock turns into a growth stock. The example I gave was Albemarle (
Albemarle's Short-Term Issues Create A Buy Opportunity
Summary
- Albemarle can't take advantage of stronger markets this year because of full plants and contract pricing.
- Longer-term growth plans have not changed with new capacity coming online this year.
- The company is shortening its contract durations to get closer to market pricing.
- Given improved lithium price outlooks, Albemarle can get to under 10 times EV/EBITDA in 2025, a year earlier than my last estimate.
I retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income. I mostly write on positions I already hold or am considering changing. I prefer to hold positions for the long-term unless there is a compelling reason to sell. I look for investment opportunities without regard to asset class, market cap, sector, or yield. I would rather maximize total return over time by buying when price is low relative to intrinsic value.
Analyst’s Disclosure:I am/we are long ALB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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