Alcoa (AA) Looks to Mine a Bonanza of Profits for Investors; Kicks Off the Earnings Season

Alcoa (NYSE: AA) is trading higher ahead of their fourth quarter earnings release, scheduled after the market closes on Monday, January 11, 2010. Shares of AA are up 2% to $16.94, a $0.33 rise.

Alcoa is expected to post an EPS of $0.06 on revs of $4.82 billion. For Q309, Alcoa posted an EPS of $0.04 and revs of $4.60 billion, beating the Street in both cases. A year ago, for Q308, Alcoa reported revs of $5.7 billion and a loss of $0.28, beating on revs but missing on profits.

AA shares have gained 47.35% for 2009, and 23.15% through Q409. For comparison, the Metals & Mining industry has seen a gain of about 74% for 2009. Through the year, metals have made an impressive gain as aluminum prices ebbed a little.

Bloomberg data has 7 analysts with a Buy rating on AA, 9 have a Hold rating, and 4 recommend to Sell. The Street price target is $15.53. The high analyst price is $25, and the low is $11.

NEWS THROUGH FOURTH QUARTER
Alcoa hasn't seen too much in terms of breaking news though the quarter that would move the stock in any sort of direction, however, it should be noted that volatility was pretty much at a 15-month low through November and into December. The company did face some protesting workers in their Italian smelting plants at the end of November. The company did put a release out that they would halt operations at the plants in Fusina and Portovesome. Two weeks after the release, it was reported that the operations resumed in the plants. The halt was the result of Alcoa appealing the EC ruling on an energy tariff. The tariff was designed to provide competitive power to energy-heavy companies like Alcoa.

Alcoa also announced as partnership with Ma'aden, a Saudi Arabian Mining Company, to build a world-class aluminum industry in the Kingdom of Saudi Arabia. Alcoa is expected to make a capital investment of about $10.8 billion, and have control of 40% of the joint venture.

Further to note is that, on the last day of 2009, Russian giant RusAl said that they were planning an IPO on the Hong Kong stock exchange to the tune of $2.6 billion. Rusal is a pretty big competitor to Alcoa, as they supply 11% of the world's primary aluminum, but the shares didn't move much on the news.

ANALYST RATINGS
Duetsche Bank upgraded Alcoa in early October to Buy from Hold. The firm stated that they saw a more favorable near-term view on aluminum with ebbing financial risk. They have become more near-term favorable on aluminum versus copper. They note that aluminium has poor long-term fundamentals versus copper, but say that the market may be missing that much of the aluminium supply is tied up in medium-term agreements.

Citi then boosted their price target on AA from $14 to $17, and maintained their Buy rating on the company.

Morgan Stanley upgraded AA in December, from Equal Weight to Overweight with a price target of $22. They said that a relly in aluminium should continue into H110.

EARNINGS SEASON KICK-OFF
Alcoa's earnings report is the traditional start to the earnings season, where companies set aside their differences and celebrate the successes each other has had through another dog-fight of a quarter. Names to keep an eye on for the next month include:

• Intel (NASDAQ: INTC) - reports on 01/14/2010;
  
  
• J.P. Morgan (NYSE: JPM) - reports on 01/15/10;
  
  
• Citigroup (NYSE: C) - reports on 01/19/10;
  
  
• IBM (NYSE: IBM) - reports on 01/19/10;
  
  
• Bank of America (NYSE: BAC) - reports on 01/20/10;
  
  
• ConocoPhillips (NYSE: COP) - reports on 01/20/10;
  
  
• Wells Fargo & Co. (NYSE: WFC) - reports on 01/20/10;
  
  
• Advanced Micro Devices (NYSE: AMD) - reports on 01/21/10;
  
  
• Goldman Sachs (NYSE: GS) - reports on 01/21/10;
  
  
• Google (NASDAQ: GOOG) - reports on 01/21/10;
  
  
• McDonald's (NYSE: MCD) - reports on 01/22/10;
  
  
• Apple (NASDAQ: AAPL) - reports on 01/25/10;
  
  
• Texas Instruments (NYSE: TXN) - reports on 01/25/10;
  
  
• Verizon Communications (NYSE: VZ) - reports on 01/26/10;
  
  
• Boeing (NYSE: BA) - reports on 01/27/10;
  
  
• 3M (NYSE: MMM) - reports on 01/28/10;
  
  
• AT&T (NYSE: T) - reports on 01/28/10 [Editor's Note: man, Verizon even reports faster];
  
  
• Microsoft (NASDAQ: MSFT) - reports on 01/28/10;
  
  
• Ford (NYSE: F) - reports on 01/29/10:
  
  
• ExxonMobil (NYSE: XOM) - reports on 02/01/10;
  
  
• News Corp. (NASDAQ: NWSA) - reports on 02/02/10:
  
  
• Cisco Systems (NASdaQ: CSCO) - reports on 02/03/10:
  
  
• Visa (NYSE: V) - reports on 02/03/10:
  
  
• Walt Disney (NYSE: DIS) - reports on 02/09/10;
  
  
• PepsiCo (NYSE: PEP) - reports on 02/11/09.

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