Morgan Stanley cites three reasons for upgrading Alcoa

Alcoa (AA +1.2%) continues its post-earnings rise, and Morgan Stanley jumps in with an upgrade of the shares to Overweight from Equal Weight.

Stanley thinks the risk to upstream pricing is skewed to the upside; slowing growth of Chinese supply, combined with ex-China capacity cuts, should allow Alcoa to achieve premium pricing.

The firm also cites an approaching recovery in the aerospace plate business starting in 2015 and in the U.S. can sheet market from 2016 due to declining supply from capacity allocation to auto products.

Also, AA is one of the largest U.S. sheet producers, and the firm expects it to have ~30% share of U.S. auto sheet market.

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Comments (7)
  • billsmith41
    , contributor
    Comments (9) | Send Message
    All Alcoa needs to do now is to begin paying decent dividends and everyone will jump on this stock. Give more reason to hold this stock even on a down slide.
    10 Jul 2014, 03:11 PM Reply Like
  • newnnly
    , contributor
    Comments (286) | Send Message


    I would agree with you that raising the dividend would attract investors, however looking at AA's dividend history it seems as though they have always paid a small dividend. I got this stock for price appreciation but would sure love to see a dividend hike.
    10 Jul 2014, 06:37 PM Reply Like
  • hoonibvird
    , contributor
    Comments (164) | Send Message
    Don't you just luv it when the analysts jump on the pony when it has 4 legs??? Another original recommendation to buy at the high, and sell at the low. This financial neophyte has a case of the herd mentality!
    10 Jul 2014, 04:38 PM Reply Like
  • brushman5
    , contributor
    Comments (49) | Send Message
    hoonibvird they jumped on the pony now I hope they whip it till its a dead horse
    10 Jul 2014, 06:33 PM Reply Like
  • manfredthree
    , contributor
    Comments (2762) | Send Message
    We have entered a long term upward increase in aluminum demand driven by demand for energy efficient transport and levered by world growth. That is coming off a backdrop of depressed economies and demand , plus oversupply. We doubt we will again see those negative conditions line up as they did the past five years. And no economy or regime has much incentive to artificially depress aluminum prices by subsidizing excessive production. We see the current cycle lasting at least until there is a major world economic downturn .
    10 Jul 2014, 09:57 PM Reply Like
  • Ruffdog
    , contributor
    Comments (2722) | Send Message
    "We have entered a long term upward increase in aluminum demand..." and a long term supply decrease. Supply is sinking fast and price is finally rising.



    AA was smart to hold a large inventory for higher prices.
    11 Jul 2014, 08:47 AM Reply Like
  • Investorix
    , contributor
    Comments (33) | Send Message
    On October 2, 2013 this is what I wrote after the Deutsche Bank analyst came out with his ridiculous opinion: "I want to meet this boy at Deutsche Bank and ask him a few questions in German in about 6 months. He'll blush when I remind him what he announced today." Who pays these guys 6 digit salaries and why I have no clue?! Never pay too much attention to analysts. Do your own homework and trust yourself.

    11 Jul 2014, 12:33 PM Reply Like
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