Chilean Chemical Giant SQM Beats the S&P 500 by 2,400%

Last week, we noticed that a company called Sociedad Quimica y Minera de Chile (SQM) has been among the top 10 best-performing stocks in the US stock market in the past year. Its stock is up 84%, while the S&P 500 and Amazon are down 13% and 39%, respectively. The recent boom in lithium demand explains the incredible stock performance lately, but performance extends well beyond the past year, as you can see on the chart.

The price of lithium has multiplied since 2021, as the Electric Vehicle (EV) market shows no signs of slowing down. Car companies like Rivian, Volkswagen, Porsche, and even GMC, with its all-electric Hummer, have announced EV entrances. Currently, all EVs require lithium for their batteries.

SQM, who, as it turns out, is now the largest producer of lithium in the world, with 17% of the world's total lithium mining, has risen to the occasion to help drive the next era of transportation (and make its stockholders happy in the process). In its latest quarter, the company reported a 572% price increase in lithium, which didn't slow down sales one bit; in fact, sales volume increased by 59%. The company ended up selling $1.5B worth of the mineral and closed the quarter with $796M in net income, 12x more than their first quarter of 2021.

Twenty years ago, the company's main business was fertilizers, and it sold lithium, to a much lesser extent — ~$30M per quarter. The application of lithium back then was quite different; it was used for the production of ceramics and glass and "to develop new technologies."

Well, that new technology has arrived in the shape of cars that need no gasoline, and sticking to their lithium product line has paid off for SQM. Its stock has gained 4,000%+ of value since 2001. That means it has achieved the almost impossible feat of beating the return of the S&P 500 and many tech companies in a span of 20 years.

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