Sociedad Quimica (NYSE: SQM) is a Chilean mining production company that deals in fertilizers, potassium nitrate, iodine, and lithium. Its lithium business gives it ties to the alternative energy and battery markets, where strong growth is expected over the next decade.
Bargain investors typically look below the $10 price line for high-opportunity stocks. Sociedad Quimica is priced above $20 today, but it is still a bargain for two key reasons. It has strong long-term potential, and it pays a compelling dividend.
The company has increased yearly revenue for four consecutive years. In the 2018 fiscal year, revenue was up 3.92%, while income was up 1.57%. These figures are not headline grabbing and for many investors they are disappointing. However, other metrics are far more favorable.
A price to earnings ratio of 16.5 compares favorably with the U.S chemicals industry and the entire stock market. An average analyst forecast of 14.6% annual earnings growth over the next three years is also enticing. Sociedad Quimica has enough short-term cash and assets to meet financial commitments over the next year. The dividend during this time should be protected. The current dividend of $0.31 equates to a 3.88% yield at today’s price.
Stock has declined -40% over a one-year period. The 52-week peak of $48.80 shows why some analysts consider this a bargain today. Any investor willing to explore beyond the traditional sub $10 bargain market should consider this stock in August.
- 1 Year Price Growth: -40.37%
- YTD Price Growth: -33.60%
- 3 Month Price Growth: -17.44%
All information is based on current and historical market data, as well as publicly available financial data. As with any financial decision, your own research is important. Stock market outcomes can never be 100% accurately predicted. Familiarity with historical data, individual industries, and individual stocks is key to developing a robust portfolio. Note that stock prices can fluctuate rapidly during trading sessions.