Gordon Higgins, CA, MBA
Novelis Inc. (bought by Hindalco an Indian based compa
NVL-T
TOP PICK
Feb 09, 2005
Cash flow before capital expenditures relative to debt is 4 X cash flow. Taking away capital expenditures, interest and taxes, free cash flow is over $200 million a year. Trading at 13 X earnings while its peers are at 15/16 X earnings.
Q: Preference between Alcan (AL-T) and this company? A: Prefers the metal producer Alcan over the packager. Alcan, relying on aluminum prices, can be more volatile, but he's a believer in aluminum prices.
The manufacturing can side of aluminum. A spin off from Alcan (AL-T). Less cyclical so would prefer this one at today's prices. However, Alcan has some recovery coming, so would prefer it now.
When you get bad news in the market, it can generally stay for some time. Shareholders that got in at higher prices are looking for their price in order to exit.
This was spun out from Alcan (AL-T) a while and the market just hasn't warmed up to it and yet they're not in a bad business. Have good operations in North America and Europe. If he's right on the future of materials, this should do quite well going forward.
A stock that's not that well understood. Covered primarily by mining analysts as it was a spinoff from Alcan (AL-T). Not really a mining company and has no commodity price risk. Basically a manufacturing company. Just announced they are going to be adding a freight rider increase on their pricing.
Hasn't found a bottom yet. A lot of people are jettisoning this position on tax loss selling. Only has one estimate, so take his comments with a grain of salt. His model price is right around the current price.