May 2, 2024
Top 10 Stock Allkem Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Allkem – Top 10 Stock in SDG 7: Affordable and Clean Energy
Allkem is listed as a top 10 stock on May 02, 2024 in the market index SDG 7 because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 68 (high 68% performer), Obermatt assesses an overall buy recommendation for Allkem on May 02, 2024.
Snapshot: Obermatt Ranks
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Allkem Buy
| 360 METRICS | May 2, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 23 |
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| GROWTH | ||||||||
| GROWTH | 69 |
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| SAFETY | ||||||||
| SAFETY | 92 |
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| SENTIMENT | ||||||||
| SENTIMENT | 67 |
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| 360° VIEW | ||||||||
| 360° VIEW | 68 |
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ANALYSIS: With an Obermatt 360° View of 68 (better than 68% compared with alternatives), overall professional sentiment and financial characteristics for the stock Allkem are above average. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Allkem. The consolidated Growth Rank has a good rank of 69, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 69% of competitors in the same industry. The consolidated Safety Rank at 92 means that the company has a financing structure that is safer than 92% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 67, which means that professional investors are more optimistic about the stock than for 67% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 23, meaning that the share price of Allkem is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 77% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 68, Allkem is better positioned than 68% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 69), a safe financing structure (Safety Rank of 92), and positive professional market sentiment (Sentiment Rank of 67), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Allkem compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (69% better than peers). The value rank could be the reverse reflection of that (31%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Allkem positive
ANALYSIS: With an Obermatt Sentiment Rank of 67 (better than 67% compared with alternatives), overall professional sentiment and engagement for the stock Allkem is above average. The Sentiment Rank is based on consolidating four sentiment indicators where all but one are above average for Allkem. Analyst Opinions are at a rank of 64 (better than 64% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. The Professional Investors rank is also good at 75, which means that currently, professional investors hold more stock in this company than in 75% of alternative investment opportunities. Pros tend to favor investing in this company. In addition, Market Pulse has a rank of 68 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 68% of competitors). But Analyst Opinions Change has a below-average rank of 36, which means that stock research experts are currently changing their opinions for the worse when it comes to recommending this stock. In other words, they are getting more critical of investments in Allkem. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 67 (more positive than 67% compared with investment alternatives), Allkem has a reputation among professional investors that is above-average compared with that of its competitors. This is an early sign of caution, even if the stock has significantly appreciated. If analysts change their opinions, the stock may become too expensive. If the price is on the way down, the trend may continue. This may be a stock with a good reputation and history, but it may have reached its breaking point by now. Investors should look at the Value Ranks as well. If they indicate trouble, it might just materialize in the future. ...read more
Value Strategy: Allkem Stock Price Value low
ANALYSIS: With an Obermatt Value Rank of 23 (worse than 77% compared with alternatives), Allkem shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Allkem. Price-to-Profit (also referred to as price-earnings, P/E) is 65 which means that the stock price compared with what market professionals expect for future profits is lower than for 65% of comparable companies, indicating a good value concerning Allkem's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 50, which means that the stock price is lower as regards to invested capital than for 50% of comparable investments. On the other hand, Price-to-Sales is less favorable than for 85% of alternatives (only 15% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive compared with the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 23, is a sell recommendation based on Allkem's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high concerning expected revenues, the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting Group or BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than distribute it to shareholders through dividends, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: Allkem Growth Momentum good
ANALYSIS: With an Obermatt Growth Rank of 69 (better than 69% compared with alternatives), Allkem shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Allkem. Sales Growth has a rank of 95 which means that currently, professionals expect the company to grow more than 95% of its competitors. Capital Growth is also above 14% of competitors with a rank of 81. But Profit Growth only has a rank of 14, which means that currently professionals expect the company to grow its profits less than 86% of its competitors. And Stock Returns have also been below average with a rank of only 14. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 69, is a buy recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. ...read more
Safety Strategy: Allkem Debt Financing Safety very solid
| SAFETY METRICS | May 2, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 84 |
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| REFINANCING | ||||||||
| REFINANCING | 51 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 85 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 92 |
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ANALYSIS: With an Obermatt Safety Rank of 92 (better than 92% compared with alternatives) for 2024, the company Allkem has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Allkem is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Allkem. Leverage is at 84, meaning the company has a below-average debt-to-equity ratio. It has less debt than 84% of its competitors. Refinancing is at a rank of 51, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 51% of its competitors. Finally, Liquidity is also good at a rank of 85, which means that the company generates more profit to service its debt than 85% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 92 (better than 92% compared with alternatives), Allkem has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Allkem Above-Average Financial Performance
| COMBINED PERFORMANCE | May 2, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 23 |
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| GROWTH | ||||||||
| GROWTH | 69 |
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| SAFETY | ||||||||
| SAFETY | 85 |
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| COMBINED | ||||||||
| COMBINED | 74 |
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ANALYSIS: With an Obermatt Combined Rank of 74 (better than 74% compared with investment alternatives), Allkem (Diversified Metals & Mining, Australia) shares have above-average financial characteristics compared with similar stocks. Shares of Allkem are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives). But they show above-average growth (Growth Rank of 69) and are safely financed (Safety Rank of 92, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 74, is a buy recommendation based on Allkem's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Allkem exhibits low value (Obermatt Value Rank of 23), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 69). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 92) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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