Alcoa (AA)

His outlook is not good near to medium term. Your major buyer is China, but they actually produce aluminum themselves. The outlook is not good.

This has turned itself from a metal basher into manufactured products. As the weight of a car or a plane comes down, aluminum is used more and more. Over the last year, this one is off about 7%. It is probably worthwhile putting in a longer-term position, as they should do well because of its major product and what it does with it will be used more and more.

This has been over $30 five times in the last 15 years. It is a cyclical company, so you have to rent it, not own it. They are in a sweet spot right now. Have made a bunch of acquisitions and have gotten more into the value added part of the aluminum business. Aluminum prices are historically low, but this is still throwing off free cash flow. Earnings are at about $1 a share and US auto demand is going to rise 25% over the next couple of years, simply because of emission standards. Dividend yield of 0.95%.

If he had to own a commodity, aluminum might be one that he might want to look at. The problem with this company is that aluminum is the one commodity that they actually make and export out of China. He wouldn’t have too much money in commodities at all right now.

Not a fan of most commodities. We still have longer to wait. Commodity cycles are very long, and we are in about a year 4 or 5 of the latest downtrend. One thing that bothers him is that China is a net producer of aluminum, not an importer.

Aluminum is not that attractive to her longer term. All commodity prices have been declining. They are trying to diversify into other applications, such as a recent titanium maker.

Aluminum prices are depressed, but this company is not dependant on the price of Aluminum. He would buy for a new client today. You need to buy it when earnings are depressed like they are now. The auto sector is moving to more and more aluminum in cars. A lot of the high cost production has been shut in so the supply has reduced.

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.

Bottoms around the end of January and moves higher to the end of May of each year. Is not in an uptrend. It is below its 20 day moving average. He is watching it to see if it bottoms.

Came down to EBV -3 and now you get a double. $15 model price, -2% at its current price. He would sell and look elsewhere.

Aluminum is one of the better commodities. AA-N is a good company to own.

Up 85% or so in the last 12 months. Given that a lot of car companies are moving to lighter cars and using more aluminum in car production, this has helped the stock. In the materials space, aluminum is probably one of the better ones to be in, compared to the deep mining. At this point, he thinks this stock is starting to reach fair value.

This has done very well. People became bullish on aluminum recently. The increase in usage of aluminum in the automobile is giving more credence. Costs have come down for them because the price of aluminum is relatively flat. Stock has more than doubled, so if you own, he would be inclined to take some profits. He thinks you have seen the best of your gains at this point.

Has done well in price appreciation, largely on the back of cost-cutting. Their revenues have not grown appreciably. The smelting business, up until recently, has been in business of trying to create demand by cutting off supply. A big part of their mining is done in China, which they don't control, and that gives him pause. The good news is that the downstream business has really picked up. However, he would still pass.

Stock has done quite well because near-term, aluminum prices have had a temporary imbalance. There is a lot of excess capacity so she doesn’t think the price is sustainable. This is a commodity that China produces and which they don’t import. She would prefer something like copper.