Alcoa, Inc. (AA)

Stats on AA:

P/E = 11.73
PEG = 0.41
Y-O-Y Growth Rate (Earnings) = 28.8%

Currently trading at a 30% discount to intrinsic value based on earnings.

Price of aluminum will rise.

The story of Alcoa, Inc. affirms its extensive voyage ahead. With major production operations being spread across the United States and Europe, the company has become the world’s leading producer of primary aluminum, fabricated aluminum, and alumina, and is active in all major aspects of the industry including technology, mining, refining, smelting, fabricating, and recycling. With an estimated 24% of the world's bauxite reserves and production across 42 countries, Alcoa enjoys a dominant position in the industry.

Catering to a wide range of customers such as aerospace, automobile, commercial transportation, and building and construction, to name a few, the company is well diversified and endowed with adequate opportunity to grow. This is fueled by economic expansion in developing regions and the demand for aluminum that has outstripped global production for the past two years. To count on the same, Alcoa is strategically positioning itself in these regions to exploit the growing demand, given that its costs are nearly 25% lower than most of the domestic producers.

On a positive note, continued gains in demand from the aerospace and power generation industries and stabilization in demand for automobile products are expected. With significant relationships with large aluminum consumers such as Boeing and General Motors and ranking as one of their largest suppliers, the company has every opportunity to nurture. Despite the fact that the pricing aspect envisages some concerns for the company, it is believed that the industry will be benefiting from ongoing consolidations leading to a more disciplined pricing environment and less volatility in aluminium prices in the long run.

Being an industry leader, the sheer size of the company helps it to afford economies of scale and a low-cost position. Moving ahead and in an attempt to bolster its financial performance, the company is working on an extensive restructuring program focused on its downstream operations, to reduce annual operating costs by approximately $125 million, thereby boosting its margins.

Aloca, Inc.’s cash flows are improving and on-balance capital allocation has become more productive and shareholder-friendly. This, coupled with a measured approach by the industry to add capacity, should keep check on prices and margins, over the next several years.

This industry leader is expected by many to make record profits over the next few years as cost-control measures take hold. Global demand for aluminum is high, but unlike some commodities, there is not an excess supply. The future continues to look bright (or should I say shiny!) for Alcoa.

housing slumpo make aluminum go glumpo

It's Alcoa: they are not going out of business. They are losing money now, but that should not be a surprise with what happened to the auto industry and to the economy in general. At the end of the first quarter, they still had a Tangible net worth of 7.5B, with cash of over 1B. They are sitting around $13.00 now, and about 2 weeks ago were less than $10.00. Even from their current price level they could return 2.5 times investment, and if they happen to dip back down, could pick up 3 times investment over the next 2-3 years. They are even paying a little dividend. For the more patient, longer term investor, it will pay off very well. If you happen to be a day trader, and are able to consistently pick the tops and bottoms of other stocks, maybe you could double or triple your money in the next couple of years, but that is a big maybe requiring very good luck. As for me, buy low, hold, watch,and sell high over a longer period of time has paid off well. JMO and worth exactly what I am charging for it.

High cost production facilities in the upper quartile for the industry. burdened by marginally profitable and unprofitable downstream operations. Management mentality is too bureaucratic and established.

analist targeted $40 next 12 mth..... energy prices will afect but there is a steady demand. EPS is growing 110% on 2006 but price not. management is investing wisely for the future in new geographies. very recommendable.

We're more comfortable in that kind of business. It means we miss a lot of very big winners. But we wouldn't know how to pick them out anyway. It also means we have very few big losers - and that's quite helpful over time. We're perfectly willing to trade away a big payoff for a certain payoff." - 1999 Berkshire Hathaway Annual Meeting

aluminum was "feared" to be going out of style with the launch of carbon-fiber planes like the 787... but reality still prevails from time to time. the world still needs aluminum, environment for commodities will improve. great company, great management, good for a trade up to $40.

I like the restructuring that they are doing. This will give them extra capital for the lean tmes. When the economy gets better they will be in a prime position to take advantage.

Out-of-favor, beaten down giant. As Jeremy Siegel put it, the growth of a company is not as profitable as the unexpected growth of a company. When expectations are as low as they have been with Alcoa (P/E of 11.8?!), beating those expectations will be easy.

Time for me to put some real money into this game...

Commodities had a recent correction, and should continue to rise for decades. Alcoa just announce a 10% stock buy-back! Increased dividends to 0.68 a share! Technically poised for an increase.

Slightly over 1 percent sales growth in a worldwide materials and commodities boom is NOT a good sign.

24 percent decrease in earnings.

Increasing foreign competition with much lower labor rates and probably lower executive salaries as well.

Key insiders selling.

The technicals are a little mixed to bearish right now:

The AMEX Materials sector stocks are getting hammered and Alcoa when placed on a chart next to these SPDRs mimics them step for step (very bearish).

30 Day MA above the 10 Day MA (bearish).

Stock is being heavily distributed of late (bearish).

The down trend is of moderate strength (as opposed to weak or strong). You could say moderately bearish...

Since 6/20/08 the stock has been trending lower and on increasing volume (bearish).

The RSI was starting to turn up from the Overbought range and as of this writing it turned back down very slightly (bearish).

There are some positive: signs the Slow Stochastics turning up above the 20 line and a Hammer Candle stick just below the linear regression line. We will still need some confirmation.

Volitility is increasing and based on all of the above info; I see an increase in some more downside potential...

Sincerely,

WiredMotley

Co is DOW component with PEG 0.51 (lowest)

A good solid metal stock. There's also a scientific probe into using aluminum pellets to power vehicles, but right now, its all those airplanes Boeng is building. Titanium and aluminum.

will merge with rtp or bhp

Rusal's (#2) production may be hampered by damage to Hydroelectric Dam in Siberia. Got to buy heavy in to Rio Tinto (#1) and Alcoa (#3), as they may have to increase production to meet Rusal's drop off.

This company has been around a long time. The way gas prices are going to continually go up, The demand will always be there for lighter, stronger vehicles. No other (type) product can match it's versatility and cost effectiveness.

This company is not going away anytime soon. The stock is currently at an 11 year low. I expect a huge rebound as the world economy recovers. Buy low and sell high.