The U.S. electric vehicle (EV) market broke records in 2021, with an estimated light vehicle sales of 607,600, approximately 83% more than in 2018. The increasing efforts to combat climate change and stringent emission limits are bolstering the EV market.

Although the road to mainstream EV adoption seems lengthy, companies are investing heavily in technologies to power the vehicles of tomorrow, while the government is initiating attractive policies and incentives to overcome consumer barriers and encourage EV sales. The U.S. EV market is projected to grow at a CAGR of 25.4% from 2021 to 2028.

Given this backdrop, we think companies that are an integral part of the EV supply chain, such as Albemarle Corporation (ALB), Vale S.A. (VALE), Freeport-McMoRan Inc. (FCX), and Lithium Americas Corp. (LAC), are well-poised to benefit from the industry tailwinds.

Albemarle Corporation (ALB)

ALB develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments, Lithium; Bromine; and Catalysts.

ALB’s net sales increased 36% year-over-year to $1.13 billion in the fiscal first quarter of 2022. Its gross profit grew 70.3% from the year-ago value to $449.03 million, while its operating profit improved 100.2% year-over-year to $311.98 million. Its EPS came in at $2.15, up 156% year-over-year.

Street expects ALB’s EPS for the fiscal quarter ending June 2022 to improve 233.3% year-over-year to $2.97. The consensus revenue estimate of $1.48 billion for the same period represents a 91.7% increase year-over-year. It has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.

ALB’s shares have gained 29.5% over the past year to close the last trading session at $215.08.

Vale S.A. (VALE)

Based in Brazil, VALE is a global producer and seller of iron ore and iron ore pellets, key raw materials used for steel making. The company operates through three segments, Ferrous Minerals; Base Metals; and Coal.

On June 9, Vale concluded the pre-feasibility study for a proposed nickel sulphate project in Quebec, Canada, with a capacity to convert 25,000 tonnes of contained nickel to nickel sulphate. The project is focused on delivering low carbon and high-purity nickel products into the growing electric vehicle industry. The feasibility study demonstrates an important milestone for the project development and is expected to expand the company’s product portfolio.

In the same month, Vale shared that it had strengthened its low-carbon advantage with independent third-party limited assurance of additional nickel products. With this, about 83% of Vale’s Class 1 nickel will have an independently verified carbon footprint, underscoring Vale’s commitment to delivering low-carbon metals while ensuring responsible carbon data management and transparency.

VALE’s net operating revenues came in at $10.81 billion in the fiscal first quarter of 2022. The company reported a net income of $4.46 billion, and its adjusted EBITDA from continuing operations stood at $6.21 billion for the quarter.

The company’s revenue is expected to increase 10.1% year-over-year to $13.96 billion in the fiscal third quarter ended September 2022. Also, it has an impressive earnings surprise history, as it topped Street EPS estimates in three of the trailing four quarters. 

VALE has gained 16% year-to-date to close the last trading session at $16.26.

Freeport-McMoRan Inc. (FCX)

FCX is a mining company engaged in mining mineral properties in the Americas and Indonesia. Its segments include refined copper products; copper in concentrate; gold; molybdenum; and other.

FCX’s revenues increased 34.7% year-over-year to $6.60 billion in the fiscal first quarter ended March 31, 2022. Its net income grew 114.3% from the year-ago value to $1.50 billion, while its operating cash flows improved 54.5% year-over-year to $1.70 billion. Its net income per share increased 116.7% from its year-ago value to $1.04.

Analysts expect FCX’s revenue for the current quarter to come in at $6.67 billion, indicating a 15.8% year-over-year growth. The company’s EPS is expected to increase 23.2% year-over-year to $0.95 for the same quarter. The company also surpassed the consensus EPS estimates in each of the trailing four quarters.

FCX has gained 5.3% over the past month to close the last trading session at $36.90.

Lithium Americas Corp. (LAC)

LAC operates as a resource company and explores lithium deposits in the United States and Argentina.

In May 2022, LAC entered into a Pastos Grandes Technical Collaboration Agreement with Arena Minerals Inc. to share technical information and explore opportunities for optimizing the production profile of the Pastos Grandes basin. “Building our relationship with Arena Minerals is an indication of our commitment to expand and further develop our production profile in Salta, Argentina,” said Ignacio Celorrio, President, Latin America of Lithium Americas.

LAC’s net cash provided by investing activities increased 268.9% from the prior-year quarter to $22.86 million in the fiscal first quarter ended March 2022. Total assets for the quarter stood at $1.14 billion, reflecting an increase of 39% year-over-year.

Analysts expect LAC’s revenue for the fiscal year ending December 2023 to come in at $202.24 million, indicating an increase of 401.7% year-over-year. Also, the company’s EPS is expected to come in at 0.68 in the same period.

Over the past year, the stock has gained 56.29% to close yesterday’s trading session at $20.99.

ALB shares were trading at $200.33 per share on Thursday morning, down $14.75 (-6.86%). Year-to-date, ALB has declined -13.99%, versus a -22.54% rise in the benchmark S&P 500 index during the same period.

About the Author: Komal Bhattar

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

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