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The Panic-Proof Portfolio (Stockchase Research)AlcoaAATOP PICKSep 06, 2022

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)

The Panic-Proof Portfolio (Stockchase Research)

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$47.86

Stock price when the opinion was issued

non-base metal mining

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TOP PICK

He really likes commodities. There's a major commodity secular movement happening. Gold, silver, and uranium have all popped, and there's a rotation within the commodity space. All that AI stuff involves either rare earth or base metals.

This name is a base metal. Aluminum trade was soft for a while, but has picked up. These metals will be used everywhere, so he likes the demand. Yield is 1.08%.

(Analysts’ price target is $38.88)

DON'T BUY

Aluminum prices have been down 3 straight weeks.

DON'T BUY

It's a material stock, and those are linked to China, and nobody wants such stocks.

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Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK

(A Top Pick Sep 06/22, Down 26.8%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with AA has triggered its stop at $35. To remain disciplined, we recommend covering the position at this time.

Premium content

Unlock this Panic-proof Portfolio opinion with Stockchase Premium

Curated by Michael O'Reilly since 2020.
1550+ opinions with 4.81 rating (one of the best performing expert).

PAST TOP PICK

(A Top Pick Sep 06/22, Down 24%)Stockchase Research Editor: Michael O'Reilly

Our PAST TOP PICK with AA is stalling. To remain disciplined, we recommend trailing up the stop (from $31) to $35 at this time.

COMMENT

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.

PARTIAL SELL

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.

DON'T BUY

Inflation will be transitory. Alcoa is hitting 2018 resistance, and won't move much past $62.

DON'T BUY

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.

BUY

Continue to own this into earnings.

COMMENT

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.

HOLD

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.

SELL

He thinks will rollover. It's been far too high up along with other commodity stocks.

BUY

They're not getting credit for delivering a great quarter. This is not the Alcoa of old.

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