Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, aluminum giant Alcoa (NYSE: AA ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Alcoa's business and see what CAPS investors are saying about the stock right now.
Alcoa facts
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Headquarters (Founded)
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New York City (1888)
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Market Cap
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$11.3 billion
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Industry
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Aluminum
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Trailing-12-Month Revenue
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$20.1 billion
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Management
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CEO Dr. Klaus Kleinfeld (since 2008)
CFO Charles McLane Jr. (since 2007)
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Return on Equity (Average, Past 3 Years)
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0.7%
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Cash/Debt
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$1.34 billion / $9.8 billion
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Dividend Yield
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1.1%
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Competitors
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Aluminum Corp. of China (NYSE: ACH )
BHP Billiton (NYSE: BHP )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 96% of the 890 All-Star members who have rated Alcoa believe the stock will outperform the S&P 500 going forward. These bulls include dicartacash and coryjobe, both of whom are ranked in the top 15% of our community.
A few months ago, dicartacash wrote that aluminum "will continue to grow in use as an industrial metal, especially for transportation as a way to reduce weight and therefore energy costs." Our CAPS member continues: "As for [Alcoa], the company is in a great position to benefit from economic recovery. With operations in 44 countries it has the right global exposure to benefit from emerging markets."
In fact, as part of its restructuring efforts, Alcoa has been busy investing in places like Russia and Brazil, where energy costs are substantially lower than in the U.S. In 2009, Alcoa even managed to grow its presence in South America by purchasing the Suriname bauxite and alumina refining operations from rival BHP Billiton. And while Aluminum Corp. of China continues to hold the low-cost position in rapidly growing China, Alcoa's costs are still about 25% lower than that of the average Chinese aluminum producer.
With Alcoa continuing to make progress in its shift toward higher-margin segments and geographic locations, CAPS members like coryjobe think Alcoa is a particularly tasty and timely turnaround opportunity:
Loss in 1st qtr 2010 narrowed yoy. This indicates that the demand trends could be improving in certain markets. Restructuring initiatives are helping improve the bottom line also. Energy prices have continued to cause difficulties for Alcoa and could take longer for some end markets to improve. Assuming aluminum prices remain favorable they should have good earnings growth over the next 3-5 years. As more third world countries develop demand for aluminum should rise. Alcoa will be a key beneficiary to this trend. Revenues and earnings should also be helped out from an increase in acquisitions and improvements to the operating efficiencies.
What do you think about Alcoa, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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