Is Albemarle (ALB) Setting Up for a Breakdown?

Albemarle Corp. (ALB) is the world’s largest lithium producer. The company produces lithium from its salt brine deposits in Chile and the U.S. and its hard rock joint venture mines in Australia. It is also a global leader in the production of bromine, used in flame retardants, and a major producer of oil refining catalysts…

Albemarle Corp. (ALB) should benefit from its actions to boost its global lithium derivative capacity. Plus, its costing cutting actions bode well. However, Lithium could see headwinds due to weak pricing and lower automotive production due to the global chip shortage.

ALB has a solid balance sheet with $824 million in cash as of the end of the second quarter, compared to only $1 million in short-term debt. Earnings have grown an average of 25.2% over the past three years but are expected to fall 29.4% year over year in the third quarter.

The stock also looks overvalued with a trailing P/E of 35.75 and a forward P/E of 43.86. ALB was showing long-term bullish momentum from March to early August, but performance has been mixed ever since, as shown in the chart below.

Take a look at the 1-year chart of ALB below with added notations…

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