SQM Is Printing Money Again and the Market Hasn't Noticed

Signal: BUY | Score: 66.85/100

Lithium's favorite punching bag just posted a 646% earnings surge and the stock is still sitting 20% below its 52-week high. SQM crushed Q2 2026 estimates on August 19th and the price barely moved. That's not a red flag - that's an opportunity.

The Setup

SQM is trading at $78.10, comfortably above its 52-week low of $40.58 but with plenty of runway to the $98 high. The RSI sits at 59, which means momentum is healthy without being overbought. This isn't a panic buy or a chasing situation - it's a stock building a base after a massive fundamental inflection. The momentum score of 73 confirms the trend is moving in the right direction, and the technical picture looks like a stock coiling for a push toward analyst consensus targets around $85.55.

The Catalyst

The story here is layered and it keeps getting better. On August 19th, SQM reported Q2 net income of $660 million and EPS of $2.31 - a 646% year-over-year explosion. Revenue came in at $2.47 billion, driven by record lithium sales volumes above 84,000 metric tons and recovering prices. This wasn't a one-quarter fluke either. Q1 already showed a 165% jump in net income and a 70% revenue surge. The earnings recovery is accelerating, not fading.

Layered on top of that is the July 21st final investment decision on the Mt Holland Lithium Expansion with Wesfarmers. That's long-term supply growth locked in with a credible partner - exactly the kind of structural catalyst that institutional buyers use to justify building positions.

Bull Case

Valuation is cheap for what you're getting. A forward P/E of 11 and a PEG ratio of 0.38 on a company growing earnings at 646% YoY is almost laughable. The market is still pricing in the bad times.
Analyst target of $85.55 implies ~10% upside with a clean technical path. That's before any positive lithium price revision changes the math.
The earnings trajectory is the real prize. Two consecutive blowout quarters with record volumes sets up a compelling Q3 into the November 17th report.

Bear Case

Debt-to-equity at 61.25 is elevated. If lithium prices roll over again, leverage becomes a problem fast.
Commodity price dependence is real. SQM's earnings are tied to lithium prices, and that market remains volatile with EV demand as the wildcard.

The Trade

Entry: $78.10
Target: $92.00
Stop Loss: $70.00
Risk/Reward: approximately 1:1.7
Timeframe: 60 to 90 days

*This is one person's analysis, not financial advice. Always do your own research.*