We are seeing weakness in all the metals, primarily because of the situation in China. For the longest time, commodity prices have been driven by what is going on in China. The Chinese government and their central bank is trying very hard to keep growth going forward. While this is going on, it is very difficult for metal prices in general to make any progress. One thing in this company’s favour is the expectation of a lot of aircraft orders. He is not sure it is enough to counteract the slow growth in metals globally.
The question was on Aluminum companies. He considers Alcoa the obvious one to consider. The stock is cheap but earnings are declining. The FMV is over 55% higher than where it is today.
Stockchase Research Editor: Michael O'Reilly This integrated producer of aluminum and the world's largest miner of bauxite is a TOP PICK. Recently reported earnings support a 30% ROE and cash reserves are growing, while the company buys back shares and retires debt. It trades at 10x earnings compared to peers at 21x and is valued at 1.5x book. We recommend placing a stop loss at $31, looking to achieve $60 -- upside of 25%. Yield 0.8% (Analysts’ price target is $78.64)
Are benefitting from high aluminum prices, driven by the Russian war. Lots of ups and downs. Take profits or exit, if you own. Eventually, shares and aluminum prices will decline.
Minerals have had a huge run. How sustainable is this underlying demand? He thinks there will be a pullback, as with BHP. Don't buy something top of market. If you've made money, take some off the table. At these levels, stay away.
They report Thursday. They reported a great quarter last time. However, many cyclicals have peaked. Aluminum goes into everything, and the rising cost has squeezed gross margins of a lot of the buyers.
Would hold but not buy more. Aluminum names might top base metals. So important in light weighting vehicles. EV is also a tailwind. There is consumer product demand too which is cyclical. Diversify in the base metal space.
Sold this over a year ago. It has gotten ahead of themselves. There are better values in less cyclical businesses that will have long term earnings growth. It is exposed to commodity prices. It is probably too late and the rebound has already happened.
He sold last year. It has since taken another hammering. Aluminum price will benefit from a stronger economy. This is a light metal and so every new generation of cars and airplanes will use it. There is nothing special about AA-N and it is a difficult place to be.
We are seeing weakness in all the metals, primarily because of the situation in China. For the longest time, commodity prices have been driven by what is going on in China. The Chinese government and their central bank is trying very hard to keep growth going forward. While this is going on, it is very difficult for metal prices in general to make any progress. One thing in this company’s favour is the expectation of a lot of aircraft orders. He is not sure it is enough to counteract the slow growth in metals globally.