) touched a new 52-week high of $13.68 on Apr 17, eclipsing its
previous high of $13.44. The stock closed the day at $13.56.
The U.S. aluminum giant, which has a market cap of roughly $16
billion, has seen its shares jump roughly 73% over a year and
around 28% so far this year. Average volume of shares traded over
the last three months is around 29,217K.
What's Driving Alcoa Up?
Alcoa's adjusted earnings of 9 cents per share for
first-quarter 2014, reported on Apr 8, topped the Zacks Consensus
Estimate by 4 cents. The company continues to expect aluminum
demand to rise 7% this year.
Alcoa, a Zacks Rank #2 (Buy) stock, is seeing strong momentum
across automotive and aerospace markets. The automotive industry
is expected to offer significant opportunity this year and
beyond. Alcoa sees meaningful growth of aluminum use in the auto
sector in 2014 as automakers increasingly look for the metal as a
cost-effective mean to boost performance, safety, durability and
fuel efficiency of their vehicles.
Alcoa is also witnessing healthy airline fundamentals. It has
raised its growth expectations for the aerospace market to 8%-9%
from 7%-8% for 2014 factoring in strong demand for both large
commercial aircraft and regional jets and sustained growth in the
business jet market.
Moreover, Alcoa remains committed to move down its cost curves
in its upstream businesses and drive profitability in its
midstream and downstream businesses. The company has taken up a
number of restructuring measures (including closure of smelters)
and is aggressively pursuing cost-cutting actions. The company,
during the first quarter, announced three smelting capacity
Alcoa made several investments during the first quarter. In
its midstream business, the Global Rolled Products unit invested
$40 million in Itapissuma, Brazil rolling mill to bump up
production of specialty foils. The company also commissioned the
$300 million expansion at its Davenport, IA facility.
In the downstream business, the recently launched Ultra ONE -
the world's lightest heavy-duty truck wheel - represents a major
opportunity. Ultra ONE is a new 40-pound wheel and being 47%
lighter than steel wheels of the same size it will help trucks
carry more load and also improve fuel efficiency.
That said, we account for continued pricing pressure. Aluminum
prices remain weak given the oversupply of the metal in the
Key Picks from the Sector
Other mining companies worth considering include
General Moly, Inc.
Golden Minerals Company
Platinum Group Metals Ltd.
). While General Moly retains a Zacks Rank #1 (Strong Buy), both
Golden Minerals and Platinum Group hold a Zacks Rank #2
ALCOA INC (AA): Free Stock Analysis Report
GOLDEN MINERALS (AUMN): Free Stock Analysis
GENERAL MOLY IN (GMO): Free Stock Analysis
PLATINUM GROUP (PLG): Free Stock Analysis
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