Alcan Aluminum (AL.TO) Buy, Sell or Hold

Alcan Aluminum (AL.TO)

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BUY

Outlook for aluminum is attractive. Chinese consumption is going to increase. There has also been some insider buying at Alcan at the senior level which is a good sign. Historically, every time it's approached its book value it's always been a good time to own the stock.

BUY

On a scale of 1 to 10 as a risk factor, Alcan would be a 5. Stock hasn't done very well and the current price is pretty attractive. Great balance sheet. Great world wide presence in the aluminum market.

TOP PICK

The world's 2nd largest aluminum producer. Has low cost hydro. Expects commodity prices to be relatively firm over the next few years. Metals business tends to have a pronounced seasonal pattern. Following the rally last fall, a lot of metal prices have pulled off. This is easily one of the best metal stocks in Canada. Expects a rebound in the summer and through the fall.

BUY

Has been one of his poorest performers over the last 2 years and a bit of a mystery as to why it has done as badly as it has. The Pechene acquisition was a pretty good one and went smoothly. Aluminum prices were not that bad. At this price can't see much downside at all.

BUY

Thinks the low on the stock is $36.60 and would be a buyer there. You could nibble at it here. Has a model price of $50.

BUY

Not a fan, but it is getting down into a Buy zone. Looks like the demand for aluminum is outstripping supply. One caveat is that it is an energy consumer of huge proportions.

BUY

There was a massive flow of aluminum exports from China before they imposed a 10% export tax, so the market is currently absorbing that and it is going to work out fine. In terms of relative value, Alcan and a number of metal companies are roughly 5 X this year's cash flow, so if you are positive on the economy going forward, this is the time to buy.

HOLD

Still likes it. Has been a disappointing performer. Aluminum price has lagged the price performance of other commodities. Forcasts are that the world wide aluminum market will continue to operate in a pretty substantial supply deficit at least through the end of 2006.

DON'T BUY

Every single day, this stock is in the "new low" column. It's a falling knife and wouldn't look at it until it starts to stabilize. It takes a lot of energy to produce aluminum and energy costs are very high.

HOLD

Can see an increased demand for aluminum, but the question is, what other competitors are coming into the fray. The stock has disappointed many holders.

BUY

Have been buying in the last week or two. Surprised that it has gotten down this low. Had a pretty good quarter, but their guidance was wishy-washy for the 2nd quarter. Getting close to 10/11 X earnings, 6 X cash flow. Even though he is worried about getting close to the end of a cycle, this is at a point where it looks worth holding.

BUY

Hit a 22 month low. They will benefit from their French acquisition, but it is taking a long time. Good price. 2% yield.

DON'T BUY

All metal companies face the same risk, economic slow down. Prefers Inco (N-T) where the fundamentals are better and even more so at Teck Cominco (TEK.SV.B-T) and Sherritt (S-T). Expect the stock will come off another 10/15%.

DON'T BUY

Becoming more interested in this as it comes down in price, but there are no signs of interuptions on the downward trend. Would wait for some sign of a base forming.

WEAK BUY

Drawing a chart back a couple of years there is big support at about $35. Can't rule out a dip down to $35. For a long term view, 2/3/4/5 years, the $35/40 area would be of great interest to start buying. Short term risks are still there.

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Alcan Aluminum (AL.TO)