Why Arcadium Lithium Stock Is Down 12% Today

Arcadiu Litiu (ALT 12.32%) Shares rose 12.1% by 10:55 a.m. ET Friday after rumors surfaced that the company could be a takeover candidate.

Australian daily Australian reported this morning that the British mining giant Rio Tinto Group may look to expand into the lithium industry. More specifically, the paper noted that Arcadium Lithium and Albemarle there are two lithium miners who have caught Rio’s attention.

Why lithium investors are excited

Commenting on Australian story, at Barron’s pointed out today that lithium prices are in a frenzy and that lithium stocks look cheap. Arcadium Lithium in particular, which was north of $13 a share just a few years ago, recently traded below $3 a share (it’s over $3 on this new news).

With the stock trading at an 80% discount to what it used to cost, at Barron’s argues that “buying low is always a good idea” and Rio “may also try to buy at the bottom of a commodity cycle.”

Is Arcadium Lithium Stock a Buy?

Of course, this smacks a bit of trying to “time the market” and we all know how hard it can be to get it right.

However, if there’s anyone who has a good understanding of this cyclical sector and how much of a price drop it takes to signal the bottom of a cycle and the likelihood of an upside, well, it’s probably Rio Tinto — which has been in mining business for over 150 years.

More so if Rio Tinto it is Looking for a lithium stock to buy, then Arcadium Lithium is probably one of the best candidates out there. While bigger names such as Chile’s Sociedad Química y Minera de Chile are barely profitable right now, and Albemarle is actually losing money, Arcadium Lithium reported $226 million in trailing 12-month profits and trades at an attractive 13.3 times trailing earnings.

If Rio Tinto is looking to make a deal, it needs to look no further than Arcadium Lithium stock.