Alcoa shakes off earnings miss, powers to 12% pickup this week

Alcoa (AA) a high flier? So it seems: Just one week after a dismal Q4 earnings report dragged AA to the bottom of the S&P 500, investors decided it wasn't so bad and have sent shares climbing more than 12%.

Shares have jumped nearly 50% since hitting a low close of $7.70 on Aug. 30 and have even gained 35% since they were yanked from the Dow on Sept. 20.

24/7's Charley Blaine cites three main reasons: AA is cutting capacity in its primary smelting business where it is no longer competitive; the auto industry is moving to aluminum in a big way; and the booming airline industry is craving AA's light but strong aluminum alloys.

Even Jim Cramer is now on board, saying that an improving global economy means that when inventories are finally worked off and new, lower-cost facilities are in place, "the amount of money that will be made off of a slight increase in sales could be shocking."

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Comments (15)
  • Ruffdog
    , contributor
    Comments (3422) | Send Message
    I agree, and aluminum is also used it high voltage electrical transmission lines, not copper. With aerospace, more light weight aluminum being used in car production and the need to reinforce our HV transmission grid, aluminum will be more in demand.


    The biggest cost in Aluminum production is electricity. We are in a NG exploration boom. At more and more electricity is produced by cheap NG rather than dirty coal, AA's advantage in the aluminum production will increase over China production.


    Perhaps the greenies will caught on to this and try to boycott China aluminum production.
    18 Jan 2014, 11:09 AM Reply Like
  • M dub
    , contributor
    Comments (81) | Send Message
    Yep good call on this name. Price action is a bit of a tell, there is some short interest to squeeze, looks trade able. But both eyes still need to be on china, IMHO so far this is just a bottom feeding spec.
    18 Jan 2014, 12:17 PM Reply Like
  • papcollins
    , contributor
    Comments (34) | Send Message
    Don't count on a big market for electrical transmission lines. Demand for electricity is pretty stable due to local solar generation and more efficient appliances and light bulbs. Utilities have a tough time siting new lines. Nobody wants one in his back yard. A proposed 50 mile line between Tucson and Nogales, Sonora was torpedoed by the Forest Service, ranchers and hikers along any of the proposed sites. By the way, a 50 mile, two circuit 345KV transmission line would use about 8 million pounds of aluminum conductors. Being a commodity product, chances are it would be priced just a few cents above LME. ( That's why AA got out of the conductor business years ago.)
    Let's hope the aluminum F-150 really catches on.
    18 Jan 2014, 12:29 PM Reply Like
  • papcollins
    , contributor
    Comments (34) | Send Message
    Retired ALCOA.
    18 Jan 2014, 12:30 PM Reply Like
  • SoldHigh
    , contributor
    Comments (991) | Send Message
    Ford's going to be needing some Aluminum - the rest will follow.
    18 Jan 2014, 05:14 PM Reply Like
  • dancing diva
    , contributor
    Comments (2729) | Send Message
    What? No mention of the confusion over the recently announced Indonesian export ban of minerals combined with the fact there had to be a ton of people short AA call options ahead of expiration Friday?


    Don't get too excited. LME copper stocks are still near record levels and double 2009. And while the long term outlook for AA is improving, last weeks excitement is unlikely to be repeated.
    18 Jan 2014, 07:29 PM Reply Like
  • nooseah
    , contributor
    Comments (710) | Send Message
    And a Jim Cramer recommendation is a positive? Isn't he the most infamous contrarian indicator?
    18 Jan 2014, 08:32 PM Reply Like
  • PeteCal
    , contributor
    Comments (90) | Send Message
    What scares me the most is to have Cramer recommend something I own.
    20 Jan 2014, 09:28 AM Reply Like
  • sbrncra
    , contributor
    Comments (257) | Send Message
    sounds like a future INTEL story!
    19 Jan 2014, 02:35 AM Reply Like
  • 9290431
    , contributor
    Comments (2) | Send Message
    If you got AA at it's lows, you will be rewarded well. Bottom feeders? Hardly.
    19 Jan 2014, 02:38 AM Reply Like
  • eoebucco
    , contributor
    Comment (1) | Send Message
    I would buy AA now. They're doing great things and there really is no reason this stock (in the long- term) can't reach the mid 40 price range again
    19 Jan 2014, 10:50 AM Reply Like
  • EquityInvestor1
    , contributor
    Comments (87) | Send Message
    66+ P/E for a commodity producer? Anyone thought of the reasons behind their miss midst a global economy that was supposed to be growing? Lastly, is the falling price of Aluminum an indication of rising global demand? Think before you cry later!
    19 Jan 2014, 11:50 AM Reply Like
  • nooseah
    , contributor
    Comments (710) | Send Message
    The world is in a synchronised economic downturn. Leave commodity producers well alone.
    19 Jan 2014, 09:12 PM Reply Like
  • atropos3000
    , contributor
    Comments (9) | Send Message
    If AA starts executing and starts surprising the market with revenue and margin beats then look for the Cubs to win back to back World Series.
    20 Jan 2014, 03:17 AM Reply Like
  • joelkatz
    , contributor
    Comments (566) | Send Message
    $FRD great buy! Undervalued.
    20 Jan 2014, 09:12 AM Reply Like
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