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Ray Merola

 
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  • Alcoa: Worth 50% More Than Current Price [View article]
    Cameron, thanks for your article. While the AA thesis is quite plausible, I'd like to see more of your view on how you believe the stock could be worth 50 percent more than the current price.

    If this year's operating earnings estimates come true (78 cents), it would be a stretch for the P/E multiple to reach 18X. This is towards the top end of the ten-year range when times were good: prior to 2008. The math comes to about $14 a share. Given today's price of about $9.50 a share, a 50 percent uplift is once again a plausible conclusion.

    However, this is my view. Do you arrive at the $14 valuation through a similar exercise or something different?

    Long AA.
    Jan 10, 2012. 10:51 AM | Likes Like |Link to Comment
  • Taking a Shine to Alcoa: Primed to Move Higher [View article]
    Viewpoints combined with courtesy and respect to all SA readers tend to garner the most interaction.
    Jun 1, 2011. 10:38 PM | 2 Likes Like |Link to Comment
  • Taking a Shine to Alcoa: Primed to Move Higher [View article]
    Nicholas: BHP is another excellent choice in the Basic Materials arena. I happen to own BHP, too.

    Indeed, it is more diversified (and bigger) than Alcoa. However, the stock is nearer to what I believe is "fair value," including the reasons you noted. AA may offer the investor a greater upside since it appears to be a more undervalued security at this point in time.
    May 31, 2011. 05:50 PM | 2 Likes Like |Link to Comment
  • Taking a Shine to Alcoa: Primed to Move Higher [View article]
    Jake2, you raise an interesting point. My attempt is to be objective. However, I do "eat my own cooking," so to speak. Therefore, when I write about a stock to own (or to sell) it tends to reflect my current view and expectation to either own it or divest.

    Within my articles, I will offer some counterpoints or risk factors with the intent to balance the opinion.

    Certainly, each investor should engage in their own due diligence as they may come to completely different conclusions based upon their perspective, risk tolerance, and investment objectives. I advocate making investment decisions upon one's own thorough analysis.

    Personally, I tend to be skeptical of writers who neither own nor have divested of the subject security. I prefer to read from those who state they either stand in the sun / dark versus the gray twilight.
    May 31, 2011. 01:25 PM | 4 Likes Like |Link to Comment
  • Alcoa's CEO Discusses Q1 2011 Results - Earnings Call Transcript [View article]
    AA is a conviction Buy for me. The share price drop after earnings was a gift. I see Alcoa as a $21 stock this year.

    Having had a chance to review the presentation and transcript, I plan to share my fundamental analysis on the stock and write a SA article in the next day or so; outlining my reasons for owning this security.

    Believe it's a good stock in the right sector for a multi-year run.
    Apr 26, 2011. 10:23 PM | 1 Like Like |Link to Comment
  • What Can Alcoa Tell Us About the Market? [View article]
    Andrew. I am long both BHP and AA.

    I see these two companies as within the same Materials sector, but not the same industry. In addition, BHP is an Australia-based company that did not get wrung out by the Great Recession the way that AA did.

    I envision Alcoa more of a mid-to-late cycle investment, while BHP was an early-cycle play; I might say even in its own secular growth mode, much as the Oils.

    Going forward, AA has a lot of go-forward potential based upon reasonable earnings estimates and historical PEs.

    I like both stocks.
    Apr 21, 2011. 03:08 PM | Likes Like |Link to Comment
  • What Can Alcoa Tell Us About the Market? [View article]
    I believe that AA is a bargain now. The management team is sound, aluminum end users are strong, and the global thesis is intact. The quarterly earning web cast was just fine.

    The fundamentals are good around AA.

    Historically, Alcoa is a cyclical materials stock. The business cycle is up. Materials stocks tends to do best mid to late cycle.

    I believe the sentiment was against AA, not the fundamentals or sector timing. Mr. Market offered us a deal.
    Apr 15, 2011. 02:10 PM | Likes Like |Link to Comment
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