Growth Trajectory Sets Up for Limited Downside in Alcoa (AA) Shares -Barron's
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Heading into the fourth-quarter earnings season, Alcoa (NYSE: AA) shares have started to look a little like its products: corroded.
Despite continued recovery in many markets globally, Alcoa has been hit by lagging supply (demand is still relatively intact). Results for the fourth quarter aren't expected to be pretty (a loss of 2 cents per share on revs of $5.74 billion), but Barron's believes things might change for the metals giant in 2012...should some events occur.
Aluminum prices -- at about 90 cents per pound -- may have bottomed, according to Barron's. That's a good thing, because a notable portion of global smelting is not profitable at those prices.
One of the more important aspects of Alcoa is its diversification; despite being a miner, it also produces products for companies like Coca-Cola (NYSE: KO), Coors (NYSE: TAP), aerospace, and accessories for items like Apple's (Nasdaq: AAPL) iPad and iPods.
Morgan Stanley sees limited downside risk for Alcoa, maintaining a price target of $13 on the stock.
Alcoa is suffering as the price of aluminum is lower than where it was in the 1980's, compared to copper and gold, which have seen prices rocket higher since then. The price of Alcoa stock is also notably lower, at about $9.20 per share, or the same price it was in the early 1990's. Alcoa traded for as high as $47 per share in 2007.
CEO Klaus Kleinfeld has a strategy to cut costs in mining and smelting, while at the same time increasing use for aluminum products and thus increasing sales. He also sees an opportunity in aerospace, suggesting the number of commercial aircraft will just about double by 2030. The auto industry might also increase its use, with new fuel efficiency standards leading to the demand for lighter cars.
Ahead of the bell and the company's quarterly earnings after the close, Alcoa shares are up 0.66 percent.
Despite continued recovery in many markets globally, Alcoa has been hit by lagging supply (demand is still relatively intact). Results for the fourth quarter aren't expected to be pretty (a loss of 2 cents per share on revs of $5.74 billion), but Barron's believes things might change for the metals giant in 2012...should some events occur.
Aluminum prices -- at about 90 cents per pound -- may have bottomed, according to Barron's. That's a good thing, because a notable portion of global smelting is not profitable at those prices.
One of the more important aspects of Alcoa is its diversification; despite being a miner, it also produces products for companies like Coca-Cola (NYSE: KO), Coors (NYSE: TAP), aerospace, and accessories for items like Apple's (Nasdaq: AAPL) iPad and iPods.
Morgan Stanley sees limited downside risk for Alcoa, maintaining a price target of $13 on the stock.
Alcoa is suffering as the price of aluminum is lower than where it was in the 1980's, compared to copper and gold, which have seen prices rocket higher since then. The price of Alcoa stock is also notably lower, at about $9.20 per share, or the same price it was in the early 1990's. Alcoa traded for as high as $47 per share in 2007.
CEO Klaus Kleinfeld has a strategy to cut costs in mining and smelting, while at the same time increasing use for aluminum products and thus increasing sales. He also sees an opportunity in aerospace, suggesting the number of commercial aircraft will just about double by 2030. The auto industry might also increase its use, with new fuel efficiency standards leading to the demand for lighter cars.
Ahead of the bell and the company's quarterly earnings after the close, Alcoa shares are up 0.66 percent.
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