When you buy or sell a stock, there are certain things you should know. You must be aware of the growth potential, the dividends, and the value of the SQM Stock. There are several ways to analyze a stock, but if you don’t know the basics, you may end up getting a poor return on your investment.
Value play
Sociedad Quimica y Minera de Chile (SQM) is a good example of a value play on a small cap stock. The company is the world’s largest producer of potassium nitrate, iodine and lithium. It also makes a decent dividend. With a forward earnings multiple of 7.4x, it is not a bad time to consider the stock.
One of the many reasons that SQM is a good investment is its low cost production. SQM has five business segments in the Salar de Atacama. This includes lithium, iodine, and a small amount of Sodium Nitrate. It is the lowest-cost producer of LCE, which makes it a good bet for investors looking for a place to put their money.
The company has a few other perks too. The company was also the first to produce a high quality Lithium battery, which has garnered industry accolades. As more and more electric vehicles hit the roads, the company can expect to see a significant uptick in lithium sales. Although the company does not break out its EV sales by region, it estimates that they will grow by more than 30 percent annually in the coming years.
Dividend play
If you’re interested in a dividend play, consider a look at Sociedad Quimica y Minera de Chile (NYSE:SQM). This lithium company offers a large exposure to the growth commodities market. SQM is also well diversified, with an array of business lines.
The lithium industry has been booming in the past several years. As lithium production ramps up, the company is in an excellent position to continue growing its revenues. Plus, it has a low payout ratio.
SQM has a forward P/E of 7.93, which is relatively low for a company with strong growth trends. It’s also got an excellent dividend policy. Over the past year, SQM has paid $5.95 in dividends per share.
Although the SQM stock has been pulling back lately, it’s still a solid growth play. In fact, it’s on the IBD 50 watchlist.
In the third quarter, SQM reported earnings of $3.85 per share, which was 51 cents ahead of estimates. Earnings were also up 904% compared to a year ago. During this time, the company increased its revenue 347%. Currently, it trades at a low price, allowing investors to take advantage of the growth potential of the company’s lithium business.
Growth play
The growth play of the moment is Sociedad Quimica y Minera de Chile (SQM). SQM is one of the quickest growing companies in the industry and has repositioned itself as a clean energy provider. Its stock is currently trading around fair market value, making for a compelling acquisition opportunity. Having a solid track record of profitability and a well funded balance sheet means that shareholders can expect good things from SQM for years to come. On top of its monetary dividend, the company also has the ability to deploy a hefty stock buyback program. And since SQM is a Zacks ranked stock, you can rest assured that your money is in good hands.
A solid balance sheet and a strong cash flow have helped the company to the big leagues and a solid dividend yield of 3.97% is a nice touch. The company has a slew of awards to its name, including the Cleantech Innovation Award for its work in green chemistry. In particular, the company has made a splash with its lithium mining and refining operations in Chile and Argentina.
Zacks Rank
The Zacks Rank of a stock is a proprietary valuation tool created by Zacks Investment Research. The Rank is assigned to stocks based on a combination of traditional and unconventional valuation metrics. This score allows you to focus on individual stocks and helps you find undervalued or overvalued stocks. Having a Zacks Rank #1 indicates that the company is more likely to outperform the market.
One of the key metrics that you need to consider when assessing a company’s value is the asset utilization ratio, also known as the sales-to-total-assets (S/TA) ratio. SQM has a S/TA ratio of 0.99, which means that it gets $0.99 in sales for every dollar in assets.
Conclusion
Several factors indicate that this company is undervalued. First, the company’s historical earnings growth rate of 22.3% is above the industry average. Second, the company has positive earnings estimate revisions. Third, it has a sales growth rate that is higher than the industry average. And fourth, it has a strong track record of beating consensus revenue estimates.
