Sociedad Química y Minera de Chile: Its Rebound Is A Matter Of When Not If

Robert J. Lake
554 Followers

Summary

  • Sociedad Química y Minera de Chile shares are trading near 5-year lows due to declining lithium prices, but their large market share and superior margins position them well for a turnaround.
  • Despite revenue declines, SQM's diversified operations and investments in new extraction capacities in China and Australia suggest robust future demand and potential revenue growth.
  • Risks include slower-than-expected EV adoption and revenue loss from a renegotiated contract with the Chilean government, impacting their lithium extraction operations and profit margins.
  • SQM's strong balance sheet, efficient capital allocation, and expected rebound in lithium pricing make it a buy at current prices, with patience required.

Brine pools for lithium mining.

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Investment Thesis

Sociedad Química y Minera de Chile (NYSE:SQM) shares are trading near 5-year lows due to declining revenue, mainly due to the decreasing spot price of lithium, which represents a significant portion of their earnings. Their large market share

This article was written by

554 Followers
I have been investing in the stock market since I was 17 years old, and over the 25+ years since I have learned the joy of compounding, the value of dividend reinvesting, and the principle that patient investing through good times and bad brings the greatest rewards. I believe the key to creating wealth is the slow accumulation of high quality assets, and the key to enjoying the process of investing is to mix this steady approach with some high risk/high reward opportunities, underappreciated turnaround plays, and transformative technologies. I invest with integrity, only putting my money into companies and industries that aim to make the world a better place.I would consider myself an amateur investor, entirely self-taught with no formal education in investing or business, but smart at figuring out who is worth listening to. I read widely and embrace the notion that my own growth comes from learning from others. In my other life, I have been teaching at the college/university level for over 20 years. I have a PhD from Brunel University and am an accomplished academic writer and editor.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SQM, UBER either through stock ownership, options, or other derivatives. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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