Category Archives: Nottingham


BUY: Abermarle

Investment Thesis Summary:

A large portion of Albemarle’s growth has come from the Lithium portion of the business, and the expansion of electric vehicles, which use lithium ion batteries, should continue to drive demand for lithium. According to Goldman Sachs, the electrical vehicles market share is expected to reach 25% of the total auto market in 2025, up from only 3% today. This will have immense positive effects on the revenues and profits of Albemarle if they are able to meet demand.

In addition, Albemarle has grown dividends since 1994, and, although it has slowed recently, the company’s dividend growth rate remains healthy. Despite dividend increases over the last two years in the 5 – 6% range, Albemarle still sports a 5-year average growth rate of 12.7%.

Moreover, Albemarle says it has received final approval to expand lithium operations in Chile, which will help significantly in meeting the growing demand for lithium.

Finally, since the first podcast, where my division and I, expressed our interest in Albemarle, the stock has increased 13% from $84 to $95. I believe this is just the beginning of the bullish trend and that the stock can reach up to $118 in 2017.

Key Qualitative Analysis:

The Firm:

On January 3rd, Albemarle announced that it had completed the acquisition of the Jiangxi Jiangli New Materials Science and Technology Co. Ltd. lithium business for approximately $145 million.

This acquisition, which combines Jiangli New Material’s manufacturing excellence and Albemarle’s leading resource position, will accelerate Albemarle’s ability to meet their lithium growth plan.

The facilities in both Jiangxi and Sichuan are strategically located in high growth regions and will enable Albemarle to enhance customer service and deliver exceptional product diversity across end markets, geographies and technologies, particularly in Asia Pacific.


Luke Kissam, the chief executive of Albemarle said that demand for lithium is likely to rise by 20,000 tonnes a year until 2021. So the future looks very positive for Albemarle.

Lux Research believes the electric vehicle market to grow to $10 billion within the next four years, while Navigant Research forecasts sales of electric vehicles to increase from 2.6 million in 2015 to over 6.0 million in 2024.

Key Quantitative Analysis:

Financial Statements:

If we take a look at some of the financials of Albemarle, we see that in the third quarter, Albemarle’s year-over-year lithium sales — which accounted for 25% of total sales — jumped nearly 30%, while this business line’s EBITDA (earnings before interest, taxes, depreciation, and amortization) shot up nearly 32%.

Year on year Albemarle Corp grew revenues 49.31% from 2.45bn to 3.65bn. In addition, the company has reduced the cost of goods sold as a percent of sales, selling, general and administrative expenses as a percent of sales and interest paid as a percent of sales. These improvements contributed to 151.21% net income growth from 133.32m to 334.91m.

Key or potential Risks:

Lithium is a highly abundant resource in the world. So while lithium has seen an increase in prices in recent years, in the long run it will be easy for new suppliers to enter the market and bring back down the prices of lithium. This could have negative effects on the bottom line of Albemarle.






















BUY: Canadian Solar Inc

Canadian Solar Inc. [NASDAQ:CSIQ] [$22.38] P/E 7.07 Overview

  • –  A Canadian energy company that designs and produces solar panels & products for residential, commercial and industrial uses.
  • –  One of the largest solar companies by market cap [1.3bn] and one of the few companies of its size in the industry that is currently profitable.
  • –  Operate globally over six continents in countries including The USA, Germany, China, India & South Africa.
  • –  They are vertically-integrated and manufacture everything from individual solar cells through to specialized off-grid home application systems.


  • –  Modestly valued with a P/E of just 7.07 despite future growth prospects. –

  • –  ROE of 12.8 (I think? Calculated using annual total liabilities & shareholders equity / net income).
  • –  Debt ratio of 0.76.

    Growth Prospects / News

  • –  $26 million Solar Project Bond in Japan. ($26M+Solar+P roject+Bond+in+Japan/11354756.html)
  • –  Secured $300 million credit in China .( secures-300-million-credit-ping-bank/)
  • –  $70m secured for new production facility in Vietnam .(

    Main Concerns

  • –  Low oil prices could dampen demand for solar panels.
  • –  Relatively high debt ratio and continuing to borrow.
  • –  Very thin profit margins.

52wk range of 14.16 – 40.08 (currently 22.38).

Decreasing debt and increasing assets, increasing net income and profit margin.

Last quarter they had a net income of $30.76 million, down annually from $108.44 million Q3 2014

but up from $18.16 million Q2 2015.